The income statement for Gum San Ltd., a private company following ASPE, is presented here:
GUM SAN LTD.
Income Statement
Year Ended December 31, 2018
Sales...............................................................$4,500,000
Cost of goods sold...........................................2,390,000
Gross profit......................................................2,110,000
Operating expenses..........................................1,070,000
Income from operations...................................1,040,000
Interest expense....................................................12,000
Income before income tax...............................1,028,000
Income tax expense............................................260,000
Net income.......................................................$ 768,000
Additional information:
1. Operating expenses include $150,000 of depreciation expense and a $12,000 gain on disposal of equipment.
2. Accounts receivable increased by $500,000.
3. Inventory decreased by $220,000.
4. Prepaid expenses related to operating expenses increased by $170,000.
5. Accounts payable to suppliers of merchandise increased by $50,000.
6. Accrued liabilities related to operating expenses decreased by $165,000.
7. Interest payable increased by $5,000.
8. Unearned revenue that is received from customers increased by $8,000.
9. Income tax payable decreased by $16,000.
Instructions
(a) Prepare the operating activities section of the statement of cash flows, using the indirect method.
(b) Would your answer in part (a) change if Gum San were a public company following IFRS?