Question: Comparative balance sheet accounts of Jensen Limited which follows IFRS

Comparative balance sheet accounts of Jensen Limited, which follows IFRS, appear below:
Balance Sheet Accounts
December 31, 2011, and 2010
Data from Jensen’s 2011 income statement follow:
Additional data:
1. Equipment that cost $10,000 and was 40% depreciated was sold in 2011.
2. Cash dividends were declared and paid during the year.
3. Common shares were issued in exchange for land.
4. FV-NI investments that had cost $35,000 and had a fair value of $37,000 at December 31, 2010, were sold during the year for proceeds of $50,000. Additional purchases of FV-NI investments were made during 2011.
5. Cost of goods sold includes $115,000 of direct labour and benefits and $11,700 of pension costs. Operating expenses include $76,000 of wages and $8,000 of pension expense.
6. Jenson has adopted the policy of classifying interest paid as operating activities and dividends paid as financing activities on the statement of cash flows.
(a) Prepare a statement of cash flows using the indirect method, including all required disclosures.
(b) Prepare the “Cash provided by (or used in) operating activities” section under the direct method.
(c) Does Jensen Limited have any options available for the classification of interest and dividends paid or received?
(d) Comment on the company’s cash activities during the year.
(e) Assume that you are a shareholder of Jensen Limited. What do you think of the dividend payout ratio that is high-lighted in the statement of cash flows?

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