Question: Question 2. Use the information below to prepare a statement of cash flow using the indirect method. 1) Unicorn Ltd. Comparative Statements of financial position
Question 2.
Use the information below to prepare a statement of cash flow using the indirect method.
1) Unicorn Ltd. Comparative Statements of financial position as at December 31st 2020 (all amounts in thousands of pounds, ,000)
|
| 2020 | 2019 |
| ASSETS | ,000 | ,000 |
| Land | 150,000 | 140,000 |
| Buildings | 400,000 | 400,000 |
| Accumulated depreciation-buildings | (42,000) | (22,000) |
| Equipment | 386,000 | 136,000 |
| Accumulated depreciation-buildings
| (56,000) | (20,000) |
| Prepaid expenses | 8,000 | 12,000 |
| Inventory | 108,000 | 0 |
| Accounts receivable | 136,000 | 52,000 |
| Cash | 108,000 | 74,000 |
|
| 1,198,000 | 772,000 |
| EQUITY AND LIABILITES |
|
|
| Share capital-ordinary (1 par value)
| 440,000 | 120,000 |
| Retained earnings | 412,000 | 272,000 |
| Bonds payable | 280,000 | 300,000 |
| Accounts payable | 46,000 | 80,000 |
| Accrued expenses payable | 20,000 | 0 |
|
| 1,198,000 | 772,000 |
2) Unicorn Ltd. Income Statement for the year ended at December 31st 2020 (all amounts in thousands of pounds, ,000)
|
| 2020 |
|
| ,000 |
| Sales revenue | 1,780,000 |
| Cost of goods sold | 930,000 |
| Operating expenses | 442,000 |
| Interest expense | 24,000 |
| Loss on disposal of plant assets | 4,000 |
| Income before income taxes | 380,000 |
| Income tax expense | 130,000 |
| Net income | 250,000 |
3) Additional information (all amounts in thousands of pounds, ,000):
- Operating expenses include depreciation expense of 66,000.
- Equipment with a cost of 82,000 and a book value of 72,000 was sold for 68,000 cash.
- Land was sold at its book value for cash
- Interest expense of 24,000 was paid in cash.
- Equipment with a cost of 332,000 was purchased for cash
- Bonds of 20,000 were redeemed at their face value for cash
- Ordinary shares (1 par value) of 260,000 were issued for cash.
- Cash dividends of 110,000 were declared and paid in 2020
- Ordinary shares of 60,000 were issued in exchange for land
REQUIRED: COMPLETE A AND B FOR 20 MARKS
A) Prepare the Unicorn Ltd. Statement of Cash Flows Indirect method for the year ended at December 31st 2020 (all amounts in thousands of pounds, ,000)
B) Show all your workings briefly on the sales of land in the cash flows from investing activities.
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