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EXERCISE 23.10 (25–35 minutes)
a. The solution can be determined through use of a T-account for
property, plant, and equipment.
Property, Plant & Equipment
12/31/18
247,000
45,000
Equipment sold
Equipment from exchange of B/P
25,000
b. The solution can be determined through use of a T-account for accu-
mulated depreciation.
Accumulated Depreciation
167,000
12/31/18
EXERCISE 23.10 (Continued)
The proceeds from the sale of equipment of $32,500 are considered
an investing activity. Investing activities include the acquisition and
disposition of long-term productive assets.
c. The cash dividends paid can be determined by analyzing T-accounts
for Retained Earnings and Dividends Payable.
Retained Earnings
91,000
12/31/18
Dividends Payable
5,000
12/31/18
18,000
Dividends declared
Cash dividends paid
?
8,000
12/31/19
d. The redemption of bonds payable amount is determined by setting up
a T-account.
Bonds Payable
46,000
12/31/18
EXERCISE 23.10 (Continued)
Redemption of bonds payable = $46,000 + $25,000 – $49,000
= $22,000
EXERCISE 23.11 (30–35 minutes)
FAIRCHILD SA
Statement of Cash Flows
For the Year Ended December 31, 2019
(Indirect Method)
Cash flows from operating activities
Net income .....................................................................
€ 810
Adjustments to reconcile net income to net cash
Cash flows from investing activities
Sale of held for collection investments
Net increase in cash .................................................................
700
Cash, January 1, 2019 ..............................................................
1,100
Cash, December 31, 2019.........................................................
€1,800
Non-cash investing and financing activities*
Issuance of ordinary shares for plant assets ................
€ 70
EXERCISE 23.12 (20–30 minutes)
FAIRCHILD SA
Statement of Cash Flows
For the Year Ended December 31, 2019
(Direct Method)
Cash flows from operating activities
Cash collections from customers ..............................
€6,450a
Less: Cash paid for merchandise .............................
€4,000b
Cash flows from financing activities
Issuance of ordinary shares
[(€1,900 – €1,700) – €70] .........................................
130
Non-cash investing and financing activities
Issuance of ordinary shares for plant assets ...........
€ 70d
a€6,900 – (€1,750 – €1,300)
EXERCISE 23.13 (30–40 minutes)
ANDREWS AG
Statement of Cash Flows
For the Year Ended December 31, 2019
Cash flows from operating activities
Less: Cash received from customers ...............
€325,150a
Cash flows from investing activities
Sale of equipment
Cash flows from financing activities
Principal payment on short-term loan
Net decrease in cash .....................................................
(3,000)
Cash, January 1, 2019 ...................................................
9,000
Cash, December 31, 2019..............................................
€ 6,000
aSales Revenue ..............................................................
€338,150
Copyright © 2018 Wiley Kieso, IFRS, 3/e, Solutions Manual (For Instructor Use Only) 23-27
EXERCISE 23.13 (Continued)
cOperating expenses ......................................................
€120,000
Increase in prepaid rent (€5,000 - €4,000) .....................
1,000
Depreciation expense
EXERCISE 23.14 (30–40 minutes)
ANDREWS AG
Statement of Cash Flows
For the Year Ended December 31, 2019
Cash flows from operating activities
Net income ...............................................................
€27,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Cash flows from investing activities
Sale of equipment [(€30,000 X 30%) + €2,000] .......
11,000
Purchase of equipment
EXERCISE 23.14 (Continued)
Cash flows from financing activities
Principal payment on short-term loan ...................
(2,000)
Principal payment on long-term loan .....................
(7,000)
Note to instructor: Supplemental disclosures of cash flow information is a
follows:
Cash paid during the year for:
EXERCISE 23.15 (25–35 minutes)
DURAND SpA
Statement of Cash Flows
For the Year Ended December 31, 2019
Cash flows from operating activities
Net income ..............................................................
€ 46,000*
Adjustments to reconcile net income to net
cash provided by operating activities:
Cash flows from investing activities
Sale of plant assets ................................................
8,000
EXERCISE 23.15 (Continued)
Cash flows from financing activities
Issuance of bonds payable......................................
75,000
Payment of dividends ..............................................
(10,000)
Net cash provided by financing activities ..............
65,000
Net increase in cash ..........................................................
5,000
LO: 2, Bloom: AP, Difficulty: Moderate, Time: 25-35, AACSB: Analytic, AICPA BB: Critical Thinking, AICPA FC: Reporting, AICPA PC: Problem Solving
EXERCISE 23.16 (30–40 minutes)
(a) Computation of net cash provided by operating activities (amounts
in 000):
Net income (¥8,000 + ¥9,000) – ¥5,000 ...................
¥12,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense ....................................
¥17,000*
Loss on sale of equipment
(¥6,000 – ¥3,000) .........................................
3,000
EXERCISE 23.16 (Continued)
(b)
Computation of net cash provided (used) by investing activities:
(c)
Computation of net cash provided (used) by financing activities:
EXERCISE 23.17 (30–40 minutes)
(a) OCHOA GROUP
Statement of Cash Flows
For the Year Ended December 31, 2019 (¥ in 000)
Cash flows from operating activities
Net income ...............................................................
¥30,250
Cash flows from investing activities
Purchase of land .....................................................
(11,000)
Sale of non-trading equity investments .................
12,875
Net cash provided by investing activities..............
1,875
EXERCISE 23.17 (Continued)
Net increase in cash .........................................................
24,250
Non-cash investing and financing activities*
Issuance of bonds for land .....................................
¥22,500
*This information is presented in the notes to the
financial statements.
(b) OCHOA GROUP
Statement of Financial Position
December 31, 2019
Assets
Equities
Investments
¥ 9,125
a
Share capital—ordinary
¥ 85,000
Land
73,500
*
Retained earnings
45,375
**
EXERCISE 23.18 (25–30 minutes)
POPOVICH SA
Statement of Cash Flows (partial)
For the Year Ended December 31, 2019
Cash flows from operating activities
EXERCISE 23.18 (Continued)
Cash flows from investing activities
Purchase of equipment ...........................................
(62,000)
Sale of equipment
Decrease in cash ..............................................................
(38,400)
EXERCISE 23.19 (20–25 minutes)
Retained Earnings ............................................................
15,000
Financing—Cash Dividends ...................................
15,000
Equipment .........................................................................
131,000
Investing—Major Repairs to Equipment ................
21,000
Investing—Purchase of Equipment .......................
62,000
Investing—Construction of Equipment .................
48,000
EXERCISE 23.20 (20–25 minutes)
1.
Bonds Payable ........................................................
300,000
Share Capital—Ordinary ................................
300,000
(Non-cash financing activity)
4.
Accumulated Depreciation—Equipment ...............
30,000
Equipment ...............................................................
5,000
5.
Retained Earnings ...................................................
123,000
EXERCISE 23.21 (45–55 minutes)
LOWENSTEIN CORPORATION
Worksheet for Preparation of Statement of Cash Flows
For the Year Ended December 31, 2019
Balance
at
12/31/18
2019
Reconciling Items
Balance
at
12/31/19
Debits
Debit
Credit
Cash
$ 24,000
(17)
$ 7,500
$ 16,500
Equity investments
19,000
(2)
$ 6,000
25,000
Credits
Accounts payable
$ 16,000
(6)
$10,000
$ 26,000
Short-term notes
payable (trade)
6,000
(7)
$ 2,000
4,000
Mortgage payable
53,400
(14)
19,600
73,000
Bonds payable
62,500
(16)
12,500
50,000
Share capital—ordinary
102,000
(15)
38,000
140,000
EXERCISE 23.21 (Continued)
Statement of Cash Flows Effects
Operating activities
Net income
(1)
31,900
Depreciation
(13)
12,000
Dec. in accounts
Investing activities
Purchase of trading equity investments
(2)
6,000
Financing activities
Payment of cash dividends
(9)
10,000
Issuance of mortgage payable
(14)
19,600
TIME AND PURPOSE OF PROBLEMS
Problem 23.1 (Time 40–45 minutes)
Purpose—to develop an understanding of the procedures involved in the preparation of a statement of
cash flows. The student is required to prepare the statement using the indirect method.
Problem 23.2 (Time 50–60 minutes)
Purpose—to develop an understanding of the procedures involved in the preparation of a statement of
Problem 23.3 (Time 50–60 minutes)
Problem 23.4 (Time 45–60 minutes)
Purpose—to develop an understanding of the procedures involved in the preparation of a statement of
Problem 23.5 (Time 40–50 minutes)
Purpose—to develop an understanding of the procedures involved in the preparation of a statement of
Problem 23.6 (Time 30–40 minutes)
Purpose—Using comparative financial statement data, the student is required to prepare the statement
Problem 23.7 (Time 30–40 minutes)
Purpose—to develop an understanding of both the direct and indirect method. The student is first asked
Problem 23.8 (Time 30–40 minutes)
Purpose—to develop an understanding of the indirect method. In the second part, the student is asked
PROBLEM 23.1
SULLIVAN CORP.
Statement of Cash Flows
For the Year Ended December 31, 2019
Cash flows from operating activities
Net income ....................................................
$370,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation ..........................................
$147,000
(a)
Cash flows from investing activities:
Proceeds from sale of equipment ...............
40,000
Loan to TLC Co. ............................................
(300,000)
Principal repayment of loan receivable ......
50,000
Net cash used by investing
activities ....................................
(210,000)
PROBLEM 23.1 (Continued)
Separate schedule presented in the notes:
Non-cash investing and financing activities:
Issuance of lease liability for building ................
$400,000
Explanation of Amounts
(a) Depreciation
Net increase in accumulated
(b) Gain on sale of equipment
Proceeds ........................................................
$ 40,000
Carrying value ...............................................
(38,000)
Gain on sale of equipment ......................
$ 2,000
PROBLEM 23.2
HINCKLEY SA
Statement of Cash Flows
For the Year Ended December 31, 2019
Cash flows from operating activities
Net income .....................................................
€14,750 (a)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Cash flows from investing activities
Sale of investments (€3,000 + €1,700) ..........
4,700
Sale of equipment .........................................
2,500
Purchase of equipment .................................
(20,000)
(d)
Proceeds from flood damage to building ....
32,000
Net cash provided by investing activities ...
19,200
PROBLEM 23.2 (Continued)
Supplemental disclosures of cash flow information:
Cash paid during the year for:
€26,000
*Presented in the notes to the financial statements.
Supporting Computations:
(a) Ending retained earnings ......................................
€20,750
Beginning retained earnings .................................
(6,000)
Net income ..............................................................
€14,750
(c) Accumulated depreciation on equipment sold ....
€ 4,400
Decrease in accumulated depreciation ................
(2,500)
Depreciation expense ............................................
€ 1,900
