Professional Documents
Culture Documents
5-2
TRUE FALSEConceptual
1. Liquidity refers to the ability of an enterprise to pay its debts as they mature.
2. The statement of financial position omits many items that are of financial value to the
business but cannot be recorded objectively.
3. Financial flexibility measures the ability of an enterprise to take effective actions to alter the
amounts and timing of cash flows.
4. Under IFRS the statement of financial position is often referred to as the statement of
changes in equity.
5. Companies frequently describe the terms of all long-term liability agreements in notes to the
financial statements.
6. An asset which is expected to be converted into cash, sold, or consumed within one year of
the statement date is always reported as a current asset.
7. Land held for speculation is reported in the property, plant, and equipment section of the
statement of financial position.
8. Under IFRS a company may use the term reserve to include items such as retained
earnings, share premium, and accumulated other comprehensive income.
9. On the statement of financial position the non-controlling interest account is reported as a
long-term investment.
10. The equity section of an IFRS statement of financial position includes share capital, share
premium, and retained earnings in that order.
11. The account form and the report form of the statement of financial position are both
acceptable under IFRS.
12. The primary purpose of a statement of cash flows is to report the cash effects of operations
during a period.
13. The statement of cash flows reports only the cash effects of operations during a period and
financing transactions.
14. Financial flexibility is a companys ability to respond and adapt to financial adversity and
unexpected needs and opportunities.
15. Collection of a loan is reported as an investing activity in the statement of cash flows.
16. Under IFRS the payment of dividends may be reported as either an investing activity or a
financing activity.
17. Companies determine cash provided by operating activities by converting net income on an
accrual basis to a cash basis.
5-3
18. Significant financing and investing activities that do not affect cash are not reported in the
statement of cash flows or any other place.
19. Under IFRS non-cash activities are reported as either investing or financing activities in the
body of the statement of cash flows.
20. Financial statement readers often assess liquidity by using current cash debt coverage.
21. Free cash flow is net income less capital expenditures and dividends.
22. The IASB recommends disclosure for all significant accounting principles and methods that
involve selection from among alternatives.
23. Companies present a Summary of Significant Accounting Policies generally as the first
note to the financial statements.
24. IFRS requires that a complete set of financial statements be presented annually and that for
comparative purposes, companies must include three complete sets of financial statements
and related notes.
25. IFRS requires specific note disclosures on inventories that are disaggregated into
classifications such as merchandise, production supplies, work in process, and finished
goods.
26. Companies may use parenthetical explanations, notes, cross references, and supporting
schedules to disclose pertinent information.
27. The accounting profession has recommended that companies use the word reserve only to
describe amounts deducted from assets.
28. On the statement of financial position, an adjunct account reduces either an asset, a liability,
or an equity account.
29. Under IFRS, companies may offset assets and liabilities; for example, accounts payable
may be offset against cash to report net cash available for other expenses.
30. Under IFRS an adjunct account on the statement of financial position increases an asset,
liability, or equity account.
Ans.
F
T
T
F
T
F
Item
7.
8.
9.
10.
11.
12.
Ans.
F
T
F
T
T
F
Item
13.
14.
15.
16.
17.
18.
Ans.
F
T
T
F
T
F
Item
19.
20.
21.
22.
23.
24.
Ans.
F
T
F
T
T
F
Item
25.
26.
27.
28.
29.
30.
Ans.
T
T
F
F
F
T
5-4
MULTIPLE CHOICEConceptual
31.
32.
The statement of financial position is useful for analyzing all of the following except
a. liquidity.
b. solvency.
c. profitability.
d. financial flexibility.
33.
Statement of financial position information is useful for all of the following except to
a. compute rates of return
b. analyze cash inflows and outflows for the period
c. evaluate capital structure
d. assess future cash flows
34.
Statement of financial position information is useful for all of the following except
a. assessing a company's risk
b. evaluating a company's liquidity
c. evaluating a company's financial flexibility
d. determining free cash flows.
35.
A limitation of the balance sheet that is not also a limitation of the income statement is
a. the use of judgments and estimates
b. omitted items
c. the numbers are affected by the accounting methods employed
d. valuation of items at historical cost
36.
37.
One criticism not normally aimed at a statement of financial position prepared using
current accounting and reporting standards is
a. failure to reflect current value information.
b. the extensive use of separate classifications.
c. an extensive use of estimates.
d. failure to include items of financial value that cannot be recorded objectively.
5-5
38.
The amount of time that is expected to elapse until an asset is realized or otherwise
converted into cash is referred to as
a. solvency.
b. financial flexibility.
c. liquidity.
d. exchangeability.
39.
40.
The statement of financial position can help assess all of the following except
a. Solvency.
b. Financial flexibility.
c. Profitability.
d. Liquidity.
41.
42.
43.
The basis for classifying assets as current or noncurrent is conversion to cash within
a. the accounting cycle or one year, whichever is shorter.
b. the operating cycle or one year, whichever is longer.
c. the accounting cycle or one year, whichever is longer.
d. the operating cycle or one year, whichever is shorter.
44.
The basis for classifying assets as current or noncurrent is the period of time normally
required by the accounting entity to convert cash invested in
a. inventory back into cash, or 12 months, whichever is shorter.
b. receivables back into cash, or 12 months, whichever is longer.
c. tangible fixed assets back into cash, or 12 months, whichever is longer.
d. inventory back into cash, or 12 months, whichever is longer.
45.
The current assets section of the statement of financial position should include
a. machinery.
b. patents.
c. goodwill.
d. inventory.
5-6
46.
47.
Equity or debt securities held to finance future construction of additional plants should be
classified on a balance sheet as
a. current assets.
b. property, plant, and equipment.
c. intangible assets.
d. long-term investments.
48.
49.
50.
51.
52.
Working capital is
a. capital which has been reinvested in the business.
b. unappropriated retained earnings.
c. cash and receivables less current liabilities.
d. none of these choices are correct.
5-7
53.
54.
55.
56.
57.
58.
The shareholders' equity section is usually divided into how many parts?
a. 6
b. 5
c. 4
d. 3
59.
5-8
60.
$70,000
35,000
47,000
200,000
55,000
75,000
Houghton Company has the following items: share capitalordinary, $820,000; treasury
shares, $85,000; deferred taxes, $100,000 and retained earnings, $313,000. What
amount should Houghton Company report as total equity?
a. $948,000.
b. $1,048,000.
c. $1,148,000.
d. $1,218,000.
63.
60,000
45,000
57,000
R280,000
110,000
105,000
5-9
65.
Olmsted Company has the following items: share capitalordinary, $920,000; treasury
shares, $85,000; deferred taxes, $100,000 and retained earnings, $363,000. What
amount should Olmsted Company report as total equity?
a. $1,098,000.
b. $1,198,000.
c. $1,298,000.
d. $1,398,000.
66.
Stine Corp.'s trial balance reflected the following account balances at December 31, 2015:
Accounts receivable (net)
R$24,000
Trading securities
6,000
Accumulated depreciationequipment
15,000
Cash
21,000
Inventory
30,000
Equipment
25,000
Patent
4,000
Prepaid expenses
2,000
Land held for future business site
18,000
In Stine's December 31, 2015 statement of financial position, the current assets total is
a. R$101,000.
b. R$92,000.
c. R$87,000.
d. R$83,000.
67.
Within the statement of financial position companies should separately report all of the
following except
a. Assets and liabilities with different general liquidity characteristics.
b. Assets and liabilities that have been financed with different types of instruments.
c. Assets that differ in their expected function in the companys central operations.
d. Liabilities that differ in their amounts, timing, and nature.
68.
Within the statement of financial position where should the account non-controlling
interest (minority interest) be reported?
a. Non-current assets.
b. Non-current liabilities.
c. Equity.
d. Current liabilities.
69.
On the statement of financial position all of the following are reported as investments
except
a. Bonds, ordinary shares, and long-term notes.
b. Non-controlling interest.
c. Pension funds.
d. Non-consolidated subsidiaries.
5 - 10
70.
71.
Using IFRS, which of the following items is matched correctly with its basis of valuation for
purposes of reporting on the statement of financial position?
Item
Basis of Valuation
I.
Inventory
A.
Cost
II.
Prepaid expenses
B.
Estimated amount collectible
III.
Receivables
C.
Lower-of-cost-or net realizable value
a.
b.
c.
d.
72.
I and A
II and C
III and B
II and B
2014
2015
2016
2,800
1,580
?
560
504
?
560
3,360
?
?
420
448
?
448
?
2,016
2,100
476
500
1,596
?
5 - 11
2014
2015
2016
Rp 5,400
3,440
?
1,080
972
?
1,080
Rp6,480
?
?
810
864
?
864
?
Rp3,888
4,050
918
920
3,078
?
Rosalie Corporation is located in London but does business throughout Europe. The
company builds and sells equipment used in manufacturing pharmaceuticals. On
December 31, 2015, Rosalie has trading securities valued at 63,000; goodwill valued at
450,000; prepaid insurance valued at 36,000; patents valued at 210,000; and a
customer list valued at 390,000. On Rosalie Corporations statement of financial position
at December 31, 2015, what amount should be reported as intangible assets?
a. 1,113,000
b. 1,149,000
c. 1,050,000
d. 660,000
75.
The financial statement which summarizes operating, investing, and financing activities of
an entity for a period of time is the
a. retained earnings statement.
b. income statement.
c. statement of cash flows.
d. statement of financial position.
76.
The statement of cash flows provides answers to all of the following questions except
a. where did the cash come from during the period?
b. what was the cash used for during the period?
c. what is the impact of inflation on the cash balance at the end of the year?
d. what was the change in the cash balance during the period?
77.
5 - 12
78.
Which of the following events will appear in the cash flows from financing activities section
of the statement of cash flows?
a. Cash purchases of equipment.
b. Cash purchases of bonds issued by another company.
c. Cash received as repayment for funds loaned.
d. Cash purchase of treasury stock.
79.
Making and collecting loans and disposing of property, plant, and equipment are
a. operating activities.
b. investing activities.
c. financing activities.
d. liquidity activities.
80.
In preparing a statement of cash flows, sale of treasury stock at an amount greater than
cost would be classified as a(n)
a. operating activity.
b. financing activity.
c. extraordinary activity.
d. investing activity.
81.
82.
Preparing the statement of cash flows, using the indirect method, involves all of the
following except determining the
a. cash provided by operations.
b. cash provided by or used in investing and financing activities.
c. change in cash during the period.
d. cash collections from customers during the period.
83.
In a statement of cash flows, receipts from sales of property, plant, and equipment and
other productive assets should generally be classified as cash inflows from
a. operating activities.
b. financing activities.
c. investing activities.
d. selling activities.
84.
In a statement of cash flows, interest payments to lenders and other creditors should be
classified as cash outflows for
a. operating activities.
b. borrowing activities.
c. lending activities.
d. financing activities.
5 - 13
85.
86.
On the statement of cash flows, which of the following items will affect both financing
activities and operating activities?
a. Issuance of equity securities.
b. Collection of loans to other entities.
c. Payment of dividends.
d. Redemption of debt.
87.
If ordinary shares were issued to acquire an CHF8,000 machine, how would the
transaction appear on the statement of cash flows?
a. It would depend on whether or not the direct method or the indirect method was used.
b. It would be a positive CHF8,000 in the financing section and a negative CHF8,000 in
the investing section.
c. It would be a negative CHF8,000 in the financing section and a positive CHF8,000 in
the investing section.
d. It would not appear on the statement of cash flows but rather in a cash flow note.
88.
89.
$250,000
110,000
140,000
120,000
5 - 14
90.
TL200,000
110,000
140,000
90,000
During 2015 the DLD Company had a net income of W200,000. In addition, selected
accounts showed the following changes:
Accounts Receivable
W12,000 increase
Accounts Payable
4,000 increase
Buildings
16,000 decrease
Depreciation Expense
6,000 increase
Bonds Payable
32,000 increase
What was the amount of cash provided by operating activities?
a. W198,000
b. W200,000
c. W206,000
d. W238,000
92.
R$1,000,000
280,000
120,000
HK$750,000
210,000
90,000
5 - 15
94.
Caroline, Inc. exchanged a tract of land it held in Mississippi for a tract of land owned by
Rosalie Corporation located in Illinois. How is this transaction reported on Caroline, Inc.s
statement of cash flows?
a. As a cash inflow from investing activities and a cash outflow from financing activities.
b. As a cash inflow and a cash outflow from investing activities.
c. As a cash inflow and a cash outflow from financing activities.
d. This transaction is not reported in the body of the statement of cash flows.
95.
96.
764,00
0
160,000
380,000
212,000
588,000
Cash debt coverage is computed by dividing net cash provided by operating activities by
a. average non-current liabilities.
b. average total liabilities.
c. ending non-current liabilities.
d. ending total liabilities.
98.
5 - 16
99.
100.
Free cash flow is calculated as net cash provided by operating activities less
a. capital expenditures.
b. dividends.
c. capital expenditures and dividends.
d. capital expenditures and depreciation.
101.
One of the benefits of the statement of cash flows is that it helps users evaluate financial
flexibility. Which of the following explanations is a description of financial flexibility?
a. The nearness to cash of assets and liabilities.
b. The firm's ability to respond and adapt to financial adversity and unexpected needs
and opportunities.
c. The firm's ability to pay its debts as they mature.
d. The firm's ability to invest in a number of projects with different objectives and costs.
102.
Net cash provided by operating activities divided by average total liabilities equals
a. current cash debt coverage.
b. cash debt coverage.
c. free cash flow.
d. the current ratio.
103.
275,000
150,000
100,000
60,000
110,000
35,000
$275,000
150,000
100,000
60,000
110,000
35,000
5 - 17
c. $165,000.
d. $215,000.
105.
225,000
150,000
100,000
60,000
110,000
35,000
In a statement of cash flows, payments to acquire debt instruments of other entities (other
than cash equivalents) should be classified as cash outflows for
a. operating activities.
b. investing activities.
c. financing activities.
d. lending activities.
107.
108.
5 - 18
109.
110.
111.
Caroline, Inc. hired a new controller in late 2015. The controller has not prepared financial
statements using IFRS before and needs your assistance. In compiling a complete set of
financial statements under IFRS, which of the following components must be included?
a. A statement of financial position at the end of the period.
b. Notes, including a summary of significant accounting policies.
c. A statement of comprehensive income for the period.
d. All of these choices are correct.
112.
114.
5 - 19
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
Ans.
d
c
b
d
d
c
b
c
a
c
d
d
b
Item
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
Ans.
d
d
d
d
c
b
d
b
d
b
d
d
d
Item
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.
67.
68.
69.
Ans.
d
a
d
c
a
b
d
a
b
d
b
c
b
Item
70.
71.
72.
73.
74.
75.
76.
77.
78.
79.
80.
81.
82.
Ans.
b
c
c
c
c
c
c
c
d
b
b
a
d
Item
83.
84.
85.
86.
87.
88.
89.
90.
91.
92.
93.
94.
95.
Ans.
Item
Ans.
Item
Ans.
c
a
d
d
d
c
b
b
a
c
c
d
a
96.
97.
98.
99.
100.
101.
102.
103.
104.
105.
106.
107.
108.
b
b
b
d
c
b
b
a
b
a
b
d
d
109.
110.
111.
112.
113.
114.
d
d
d
c
d
d
Solutions to those Multiple Choice questions for which the answer is none of these.
41. Total assets minus total liabilities.
52. Current assets less current liabilities.
55. Many answers are possible.
5 - 20
EXERCISES
Ex. 5-115Definitions.
Provide clear, concise answers for the following.
1. What are assets?
2. What are liabilities?
3. What is equity?
4. What are current liabilities?
5. Explain what working capital is and how it is computed.
6. What are intangible assets?
7. What are current assets?
Solution 5-115
1. Assets are resources controlled by the entity as a result of past events and from which future
economic benefits are expected to flow to the entity.
2. Liabilities are present obligations of an entity arising from past events, the settlement of which
is expected to result in an outflow from an entity of resources embodying economic benefits.
3. Equity is the residual interest in the assets of an entity after deducting all its liabilities.
4. Current liabilities are obligations that are expected to be settled in the normal operating cycle,
or one year, whichever is longer.
5. Working capital is the net amount of a companys relatively liquid resources. It is the excess of
total current assets over total current liabilities.
6. Intangible assets are economic resources or competitive advantages that lack physical
substance and have a high degree of uncertainty about the future benefits to be received.
They are not financial instruments.
7. Current assets are cash and other resources (future economic benefits) expected to be
converted to cash, sold, or consumed in one year or the operating cycle, whichever is longer.
5 - 21
Ex. 5-116Terminology.
In the space provided at right, write the word or phrase that is defined or indicated.
1. Obligations expected to be settled in the
next year or operating cycle.
1.____________________________________
2.____________________________________
3.____________________________________
4.____________________________________
5.____________________________________
6.____________________________________
7.____________________________________
8.____________________________________
Solution 5-116
1.
2.
3.
4.
Current liabilities.
Statement of financial position.
Liabilities.
Current assets.
5.
6.
7.
8.
5 - 22
ASSETS
Investments
Plant and equipment
Intangibles
Other assets
Current assets
f.
g.
h.
i.
j.
k.
l.
Using the letters above, classify the following accounts according to the preferred and ordinary
statement of financial position presentation.
_____ 1. Bond sinking fund
_____ 2. Prepaid pension cost
_____ 3. Restricted retained earnings
_____ 4. Current maturity of long-term debt
_____ 5. Bonds payable (due in 3 years)
_____ 6. Unrealized gain on non-trading securities
_____ 7. Securities owned by another company which are collateral for that company's note
_____ 8. Trading securities
_____ 9. Inventory
_____ 10. Mortgage payable
_____ 11. Patents
_____ 12. Unearned rent revenue
Solution 5-118
1.
2.
3.
4.
a
d
i
k
5.
6.
7.
8.
j
h
l
e
9.
10.
11.
12.
e
j
c
k
5 - 23
______ 5. Copyrights
______ 6. Inventory
a. Par value
b. Current cost of replacement
c. Amount payable when due, less unamortized discount or plus unamortized premium
d. Amount payable when due
e. Fair value at statement of financial position date
f.
g. Lower-of-cost-or-net-realizable value
h. Original cost less accumulated amortization
i.
j.
k. Historical cost
l.
Solution 5-119
1.
2.
3.
4.
a
l
j
f
5.
6.
7.
8.
h
g
c
k
9.
10.
11.
12.
k
h
e
d
5 - 24
______22.
5 - 25
Solution 5-120
1.
2.
3.
4.
5.
j
j
b
e
e
6.
7.
8.
9.
10.
j
g
k
e
f
11.
12.
13.
14.
15.
k
(e)
(b)
c
j
16.
17.
18.
19.
20.
a
a
l
j
j
21.
22.
23.
24.
25.
f
e
c
(c)
h
Investments
Plant and Equipment
Intangible Assets
Other Assets
Current Assets
f.
g.
h.
i.
Indicate by letter how each of the following items should be classified. If an item need not be
reported on the statement of financial position, use the letter "X." A letter may be used more than
once or not at all. If an item can be classified in more than one category, choose the category
most favored by the authors of your textbook.
_____ 1. Employees' payroll deductions.
_____ 2. Cash in sinking fund.
_____ 3. Rent revenue collected in advance.
_____ 4. Equipment retired from use and held for sale.
_____ 5. Patents.
_____ 6. Payroll cash fund.
_____ 7. Accrued revenue on temporary investments.
_____ 8. Advances to salespersons.
_____ 9. Bank overdraft.
_____ 10. Salaries which company budget shows will be paid to employees within the next year.
_____ 11. Work in process.
_____ 12. Appropriation for bonded indebtedness.
5 - 26
Solution 5-121
1.
2.
3.
4.
i
a
i
d or e
5.
6.
7.
8.
c
e
e
e
9.
10.
11.
12.
i
x
e
g
Investments
Plant and Equipment
Intangible Assets
Current Assets
e.
f.
g.
h.
Instructions
Indicate by letter how each of the items below should be classified at December 31, 2015. If an
item is not reported on the December 31, 2015 statement of financial position, use the letter "X"
for your answer. If the item is a contra account within the particular classification, place
parentheses around the letter. A letter may be used more than once or not at all.
Sample question and answer:
(d)
5 - 27
Solution 5-122
1. h
2. a
3. x
4.
5.
6.
(b)
f
x
7.
8.
9.
g
d
x
10.
Solution 5-123
1. c
2. c
3. a
4.
5.
6.
d
d
b
7.
8.
9.
a
c
a
10.
11.
12.
b
c
b
5 - 28
$150,000
(50,000)
20,000
35,000
40,000
$195,000
$ 65,000
60,000
50,000
20,000
$195,000
Hilton Company
Statement of Cash Flows
For the Year Ended December 31, 2015
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in accounts receivable
Increase in accounts payable
Depreciation expense
Gain on sale of equipment
Amortization of patents
Net cash provided by operating activities
$45,000
$(16,000)
8,000
15,000
(6,000)
2,000
12,000
(25,000)
(48,000)
(15,000)
40,000
3,000
48,000
(61,000)
25,000
12,000
28,000
$40,000
At the beginning of 2015, Accounts Payable amounted to $12,000 and Bonds Payable was
$10,000.
Instructions
Calculate the following for Hilton Company:
a. Current cash debt coverage
b. Cash debt coverage
c. Free cash flow
5 - 29
5 - 30
PROBLEMS
Pr. 5-125Statement of financial position presentation.
The following statement of financial position was prepared by the bookkeeper for Kraus Company
as of December 31, 2015.
Kraus Company
Statement of Financial Position
as of December 31, 2015
Investments
Equipment (net)
Patents
Inventories
Accounts receivable (net)
Cash
76,300
96,000
32,000
57,000
52,200
80,000
393,500
Equity
Non-current liabilities
Accounts payable
215,500
100,000
78,000
393,500
48,300
12,400
135,000
40,000
Intangible assets
Patents
Franchises
60,700
(5)
95,000
32,000
9,000
Current assets
*Equipment held for sale
Inventories
Accounts receivable
Less: Allowance for doubtful accounts
Trading securities
Cash
Total current assets
Total assets
55,000 (2)
3,800
41,000
1,000
62,000
(4)
(3)
51,200
19,000
70,100
(1)
203,300
400,000
215,500
100,000
82,000 (6)
2,500
84,500
184,500
400,000
5 - 31
5 - 32
40,000
2,400
600
?
50,400
157,320
102,000
78,000
24,400
60,000
10,000
5,000
351,400
80,400
1,860
3,000
1,320
1,560
53,040
900
15,000
40,000
8,000
5 - 33
Solution 5-126
Leong Corporation
Statement of Financial Position
December 31, 2015
Assets
Property, plant and equipment
Land
Buildings
Accumulated depreciation - buildings
Equipment
Accumulated depreciation -equipment
Total property, plant and equipment
Current assets
Inventory
Supplies
Prepaid advertising
Cash
Total current assets
Total assets
157,320
80,400
(15,000)
40,000
(10,000)
65,400
30,000
252,720
102,000
1,860
5,000
40,000
148,860
401,580
60,000
234,680
294,680
78,000
24,400
3,000
900
600
28,900
106,900
401,580
5 - 34
2016
Land...................................................... 63,800
Equipment............................................ 504,000
Inventory............................................... 173,000
Accounts receivable (net).....................
84,000
Cash.....................................................
32,000
TOTAL....................................... 856,800
21,000
789,600
201,600
151,200
63,000
1,226,400
487,200
205,800
302,400
29,400
86,000
115,600
1,226,400
215,200
31,600
(67,200)
(28,600)
35,600
(37,800)
(66,400)
148,800
(84,000)
42,800
(41,200)
(76,600)
31,000
32,000
63,000
5 - 35
5 - 36
HK$1,547,000
HK$1,445,000
Equity:
Share CapitalOrdinary
Retained Earnings
Total Equity
HK$ 510,000
374,000
884,000
HK$ 467,500
340,000
807,500
Non-Current Liabilities:
Bonds Payable
340,000
391,000
Current Liabilities:
Accounts Payable
Notes Payable
Income Taxes Payable
Total Current Liabilities
187,000
51,000
85,000
323,000
102,000
68,000
76,500
246,500
Total Liabilities
663,000
637,500
HK$1,547,000
HK$1,445,000
Sales Revenue
Less Cost of Goods Sold
Gross Profit
Expenses:
Depreciation Expense
Salaries and Wages Expense
Interest Expense
Loss on Sale of Equipment
Income Before Taxes
Less Income Tax Expense
Net Income
HK$1,615,000
731,000
884,000
HK$1,513,000
731,000
782,000
153,000
391,000
34,000
17,000
289,000
119,000
HK$ 170,000
136,000
357,000
34,000
0
255,000
102,000
HK$ 153,000
Additional Information:
5 - 37
During the year, Johnston sold equipment with an original cost of HK$153,000 and accumulated
depreciation of HK$119,000 and purchased new equipment for HK$272,000.
5 - 38
Solution 5-128
Johnston Enterprises
Statement of Cash Flows
For the Year Ended December 31, 2016
Net Income
HK$ 170,000
263,500
433,500
(255,000)
17,000
(272,000)
(51,000)
42,500
(136,000)**
(144,500)
34,000
119,000
HK$153,000