Using the indirect method, each non-cash object is introduced returned to net earnings to produce cash from operations.
A gain increases net earnings however cash is not received so it ought to be subtracted out of net earnings when changing to a money groundwork from operating activities.
Understanding the Indirect Method
The indirect technique provides the statement of cash flows beginning with net profits or loss, with subsequent additions to or deductions from that quantity for non-cash income and price items, ensuing in cash drift from running activities.
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