Compared to a company that develops an intangible asset internally, a company that purchases the same asset would exhibit:

A. Higher cash flow from operations.
B. Higher cash flow from investing activities.
C. Higher cash flow from financing activities.

Correct Answer: B

The company that purchases the asset would record the whole value of the purchase as an investing outflow. On the other hand, the company developing the intangible asset internally would report costs associated with the asset's development as an operating cash outflow until the asset developed proves to be beneficial.