Comparative SFP accounts of Jensen Limited, which follows IFRS, appear

Comparative SFP accounts of Jensen Limited, which follows IFRS, appear below: 

Jensen Limited Statement of Financial Position Accounts December 31, 2020 and 2019 Debit balances 2020 2019 Cash $ 80,000 $ 51,000 FV-NI investments 59,000 80,000 Accounts receivable 138,500 119,000 Inventory 75,000 61,000 Deferred tax asset 6,500 11,000 Equipment 70,000 48,000 Buildings 145,000 145,000 Land 40,000 25,000 $614,000 $540,000 Credit balances

Additional information: 

1. Equipment that cost $10,000 and was 40% depreciated was sold in 2020. 

2. Cash dividends were declared and paid during the year. 

3. Common shares were issued in exchange for land. No other land was acquired or disposed of during the year. Common shares were also issued for equipment purchases in the amount of $20,000.

4. FV-NI investments that had cost $35,000 and had a fair value of $37,000 at December 31, 2019, were sold during the year for proceeds of $50,000, resulting in a realized gain of $13,000. Jensen also had unrealized gains during the year of $11,000. Additional purchases of FV-NI investments were made during 2020. 

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 salaries and wages and $8,000 of pension expense. 

6. Jensen has adopted the policy of classifying interest paid as operating activities and dividends paid as financing activities on the statement of cash flows. 

7. No accounts receivable were written off during the year. 


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 highlighted in the statement of cash flows?


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