The unclassified balance sheet accounts for Sorkin Corporation, which is a public company using IFRS, for the year ended December 31, 2011, and its statement of comprehensive income and statement of cash flows for the year ended December 31, 2012, are as follows:
SORKIN CORPORATION
Balance Sheet Accounts
December 31, 2011
($ in millions)

SORKIN CORPORATION
Statement of Cash Flows (Indirect Method)
For the Year Ended December 31, 2012

Additional information from the accounting records:
1. The investment income represents Sorkin€™s reported income in its 35%-owned, significantly influenced investment in Stoker Inc. Sorkin received a dividend from Stoker during the year.
2. Early in 2012, Sorkin purchased shares for $25 million as a long-term investment at fair value with gains and losses in net income. There were no purchases or sales of these shares during 2012, nor were there any dividends received from this investment.
3. A machine that originally cost $70 million became unusable due to a flood. Most major components of the machine were unharmed and were sold together for $10 million. Sorkin had no insurance coverage for the loss because of the nature of this casualty.
4. Reversing differences in the year between pre-tax accounting income and taxable income resulted in an increase in future taxable amounts, causing the future income tax liability to increase by $3 million.
5. On December 30, 2012, land costing $46 million was acquired by paying $23 million cash and issuing a $23-million, four-year, 15% note payable to the seller.
6. Equipment was acquired through a 15-year financing lease. The present value of minimum lease payments was $82 million when signing the lease on December 31, 2012. Sorkin made the initial lease payment of $2 million on January 1, 2013.
7. Serial bonds with a face value of $60 million were retired at maturity on June 20, 2012. In order to finance this redemption and have additional cash available for operations, Sorkin issued preferred shares for $75 million cash.
8. In February, Sorkin issued a 4% stock dividend (four million shares). The market price of the common shares was $7.50 per share at that time.
9. In April 2012, 1 million common shares were repurchased for $9 million. The weighted average original issue price of the repurchased shares was $12 million.
Instructions
(a) Prepare the unclassified balance sheet accounts for Sorkin Corporation for the year ended December 31, 2012, as a check on the statement of cash flows. Add whichever accounts you consider necessary.
(b) Prepare the operating activities section of the statement of cash flows for Sorkin Corporation using the direct method.
(c) How would the statement of cash flows differ if the terms on the purchase of land had been essentially the same except that the financing for the note payable had been negotiated with a mortgage company instead of the seller ofthe land?

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Cash Accounts receivable Inventory Prepaid expenses Long-term investment in shares of Stoker Inc Land Buildings and equipment Accumulated depreciation Patents Accumulated amortization patent Goodwill 事21 194 200 12 125 150 400 (120) 60 28) 60 Total assets $1,074 $ 65 Accounts payable Salaries and wages payable Bond interest payable Income taxes payable Future income tax liability Bonds payable Common shares Retained earnings 4 250 495 227 $1,074 Total liabilities and shareholders' equity SORKIN CORPORATION Statement of Income Year Ended December 31, 2012 ($ In milllons) Revenues: $410 Sales revenue Holding gain on investments (FV-NI) Investment income $426 Expenses and losses: 158 Cost of goods sold Administrative expenses Salaries and wages expense Depreciation and amortization expense Bond interest expense Loss from damaged equipment Loss on impairment of goodwill 65 21 28 20 332 Income before income taxes Income taxes Net income 39 Cash flows from operating activities Net earnings $55 Add back deduct) non-cash revenues and expenses: Investment revenue from equity investment in Stoker Inc. Dividends received from equity investment in Stoker Inc Loss from damaged equipment Depreciation expense Holding gain on investments at FV-NI Amortization of patent Amortization of bond discount Loss on impairment of goodwill (11) 18 19 20 52 Add (deduct) changes in non-cash orking capital: Decrease in accounts receivable Increase n nventories Decrease in prepaid expenses Decrease in accounts payable Decrease in salaries and wages payable Increase in future income tax liability Increase in bond interest payable Decrease in income taxes payable Net cash provided by operating activities 4 (15) (14) 93 Cash flows from investing activities: Proceeds from disposal of damaged equipment Purchase of land (note 1) Purchase of long-term investments (FV-NI) Net cash used by investing activities 10 (23) (25) (38) Cash flows from financing activities: Dividends paid Redemption of serial bonds Issuance of preferred shares Repurchase of common shares (60) 75 Net cash used by financing activities Net increase in cash Cash, January 1, 2012 Cash, December 31, 2012 54 21 $75 Note 1. Non-cash investing and financing activities (a) During the year, land was acquired for $46 million in exchange for cash of $23 million and a $23-million, four-year, 15% note payable to the seller (b) Equipment was acquired through a finance lease that was capitalized initially at $82 million.