Information pertaining to select activities of Rosamelia Corp. during 2021 is set out below: 

1. On January 1, 2021, Rosamelia leased right-of-use equipment. The lease calls for five annual payments of $20,000 due at the beginning of the year. Rosamelia must return the equipment to the lessor at the end of the lease. The payment due on January 1, 2021, was made as agreed. The implicit rate in the lease is 4%; the present value of the lease payments is $92,598. 

2. The opening balance in the computer account was $70,000; the closing balance was $80,000. The corresponding balances in the accumulated depreciation accounts were $42,000 and $53,000. During the year, Rosamelia scrapped a computer originally costing $10,000 having a remaining net book value of $2,000 and purchased a replacement machine for cash. 

3. The opening balance in the land account was $250,000; the closing balance was $300,000. During the year, land costing $40,000 was given to a creditor in full settlement of a $50,000 loan. The fair value of the land at the time of the exchange was $50,000. The company also purchased a separate parcel of land for cash during the year. 

Required:

a. Prepare the underlying journal entries to record the transactions and record events stemming from the transactions (e.g., the accrual of interest at year-end). 

b. For each entry, identify the cash flow effects, if any, under both the direct and indirect methods of presentation and classify the cash flow according to its nature. 

c. Why does the IASB require that companies classify cash flows as arising from operations, investing, or financing activities?