If a company extinguishes debt, which of the following explains the effect of this transaction on a statement of cash flows?
A) If the debt is extinguished with a loss, the loss is subtracted from the operating section if the company uses the direct method.
B) If the debt is extinguished with a loss, the loss will not appear in the operating or the investing section if the company uses the direct method.
C) If the debt is extinguished with a gain, the gain is added to the cash flow from financing section if the company uses the indirect method.
D) If the debt is extinguished with a gain, the gain is added to the operating section if the company uses the indirect method.
E) If the debt is extinguished with a loss, the loss is added to the financing section if the company uses the indirect method.
B
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Indicate whether the statement is true or false