Sable Island Ltd. is a private company reporting under ASPE. Its income statement contained the following condensed information: 

Sable Island’s balance sheet contained the following comparative data at December 31: 

Additional information: 

Accounts payable relate to operating expenses. 

Instructions 

Prepare the operating activities section of the cash flow statement using either 

(a) The indirect method

(b) The direct method

What are the advantages and disadvantages of the indirect method of determining cash provided (used) by operating activities?

Transcribed Image Text:

SABLE ISLAND LTD. Income Statement Year Ended December 31, 2024 Service revenue Operating expenses Depreciation expense Gain on sale of equipment Profit from operations Other expenses Interest expense Profit before income tax Income tax expense Profit for the year $642,000 50,000 (23,000) $900,000 669,000 231,000 5,000 226,000 56,500 $169,500