David has a good understanding of the differences between a statement of cash flows prepared using the direct method versus one prepared using the indirect method. Before making a final decision on which method Act Co. will use to prepare its statement of cash flows, David has asked the auditor, Laughlin, to explain the disclosure requirements specific to the indirect method, aside from the reconciliation requirements. Find authoritative guidance that responds to this inquiry. Enter your response in the answer fields below. Guidance on correctly structuring your response appears above and below the answer fields.

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