The income statement for Gum San Ltd., a publicly traded company following IFRS, is presented here:

Additional information:
1. Operating expenses include $150,000 of depreciation expense and a $12,000 gain on sale of equipment.
2. Accounts receivable increased by $500,000.
3. Merchandise 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. Income tax payable decreased by $16,000.
Instructions
(a) Prepare the operating activities section of the statement of cash flows, using either
(1) The indirect method
(2) The direct method, as assigned by your instructor.
(b) Would your answer in (a) change if Gum San were a private company following ASPE?

Transcribed Image Text:

GUM SAN LTD. Income Statement Year Ended December 31, 2012 Sales Cost of goods sold Gross profit Operating expenses Profit before income tax Interest revenue Profit before income tax Income tax expense Profit $4,500,000 2,390,000 2,110,000 1,070,000 1,040,000 12,000 1,052,000 260,000 $ 792,000