Question: REQUIRED: a. From the information given below, prepare Georgian's statement of cash flows for the year ended December 31, 2024, using the indirect method. b.
REQUIRED:
a. From the information given below, prepare Georgian's statement of cash flows for the year ended December 31, 2024, using the indirect method.
b. Prepare Georgian's cash flows from operating activities for the year ended December 31, 2024, using the direct method.
c. Prepare note disclosure(s) for noncash transactions.
Georgian Ltd.'s financial statements as of December 31, 2024, appear below.
| 2024 | 2023 | ||||||||
| Cash | 196,000 | 85,000 | |||||||
| Investmentsat fair value through profit or loss held for trading purposes | 22,000 |
| 18,000 | ||||||
| Investmentsat fair value through other comprehensive income | 62,000 |
| 55,000 | ||||||
| Accounts receivable | 66,000 |
| 42,000 | ||||||
| Inventory | 66,000 |
| 80,000 | ||||||
| Prepaid expenses | 10,000 |
| 14,000 | ||||||
| Plant assets | 575,000 |
| 425,000 | ||||||
| Accumulated depreciation | (144,000) |
| (120,000) | ||||||
| Goodwill | 42,000 |
| 57,000 | ||||||
|
| ||||||||
| Accounts payable | $33,000 |
| $35,000 | ||||||
| Accrued liabilities | 37,000 |
| 32,000 | ||||||
| Cash dividends payable | 6,000 |
| 5,000 | ||||||
| Bonds payable | 66,000 |
| 62,000 | ||||||
| Mortgage payable |
| 104,000 | |||||||
| Deferred income tax liability | 2,000 |
| 4,000 | ||||||
| Preferred shares | 218,000 |
| |||||||
| Ordinary shares | 297,500 |
| 210,000 | ||||||
| Retained earnings | 228,500 |
| 204,000 | ||||||
| Reserves | 7,000 |
| - | ||||||
| $656,000 |
| Sales |
|
| $763,000 | ||||
| Cost of sales |
|
| (412,000) | ||||
| Gross profit |
|
| 351,000 | ||||
| Interest expense, long-term |
|
| (7,000) | ||||
| Depreciation expense |
|
| (40,000) | ||||
| Operating expenses |
|
| (175,000) | ||||
| Other gains and losses |
|
| (11,000) | ||||
| Income before income tax |
|
| 118,000 | ||||
| Income tax expense |
|
| (25,000) | ||||
| Net income |
|
| 93,000 | ||||
| 7,000 | ||||||
| Comprehensive income |
|
| $100,000 | ||||
Supplemental Information:
- During the year, Georgian exchanged 12,000 ordinary shares for plant assets having a fair value of $60,000.
- During the year, Georgian declared and issued a stock dividend of 5,500 ordinary shares. The transaction was valued at $27,500.
- During the year, goodwill was written down $15,000 to reflect a permanent impairment of the asset.
- The deferred income tax liability represents temporary differences relating to the use of capital cost allowance for income tax reporting and straight-line depreciation for financial statement reporting.
- Georgian did not buy or sell any at fair value through profit or loss or at fair value through other comprehensive income securities during the year.
- The recorded increase in the bonds payable account was due to the amortization of the discount.
- Georgian elects to record interest paid as an operating activity and dividends paid as a financing activity.
- During the year, Georgia sold equipment (plant assets) that originally cost $100,000 for $84,000 cash.
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