The following are selected statement of financial position accounts of Pavicevic Ltd. at December 31, 2019 and 2020, and the increases or decreases in each account from 2019 to 2020. Also presented is the selected income statement and other information for the year ended December 31, 2020. 

Additional information:

1. During 2020, equipment costing $45,000 was sold for cash.

2. Accounts receivable relate to sale of inventory. 

3. During 2020, $20,000 of bonds payable were issued in exchange for property, plant, and equipment. All bonds were issued at par. 

4. During the year, short-term investments accounted for at FV-NI with a carrying amount of $17,000 were sold. Additional investments were purchased. 

Instructions 

a. Determine the category (operating, investing, or financing) and the amount that should be reported in the statement of cash flows for the following items. Assume Pavicevic Ltd. follows IFRS and has chosen to report cash dividends received and paid as operating activities and interest received and paid as operating activities. 

1. Cash received from customers 

2. Payments for purchases of property, plant, and equipment 

3. Proceeds from the sale of equipment 

4. Cash dividends paid 

5. Redemption of bonds payable 

6. Proceeds from the sale of FV-NI investments 

7. Purchase of FV-NI investments 

b. Assume now that Pavicevic Ltd. follows ASPE. 

1. What choices could the company have made in the classification of cash flows? 

2. What difference would following ASPE have had in presenting the activities listed in part (a)?

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Statement of Financial Position (selected accounts) 2020 2019 Increase (Decrease) Assets Accounts receivable $ 84,000 $ 74,000 $10,000 FV-NI investments 41,000 49,000 (8,000) Property, plant, and equipment Accumulated depreciation 177,000 147,000 30,000 (78,000) (67,000) 11,000 Liabilities and shareholders' equity Bonds payable Dividends payable 149,000 146,000 3,000 8,000 5,000 3,000 Common shares 31,000 22,000 9,000 Retained earnings 104,000 91,000 13,000