easy · Financial Accounting statement-of-cash-flows
A company has a 'Provision for Inventory Obsolescence' (a non-cash expense) of $18,000.
How is this treated when calculating CFO using the indirect method?
- It is an add-back to net income.
- It is a subtraction from net income.
- It is ignored because inventory changes are already captured in the working capital section.
- It is reported as an investing cash outflow.
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