Translation:The bear is sitting by the river and is eating lunch.
What about "The bear is sitting and eating lunch by the river"? Is there any way to determine whether folyónál applies to one or both verbs?
Well, since it does not make any difference (if she is sitting at the river, she is not having lunch somewhere else), I guess both versions could be accepted.
for some reason, despite 'having lunch' is one of the two options give it is not accepted. Not the first time I encounter this. Difficult to guess which of the given options have been deemed to be the 'correct' one...