Question

Ayayai Corp.’s statement of financial position at the end of 2019 included the following items: Current assets $1,115,000 Current liabilities $1,027,100 Land 30,100 Bonds payable 1,111,000 Buildings 1,130,000 Common shares 181,000 Equipment 321,000 Retained earnings 175,000 Accumulated depreciation—buildings (131,000 ) Accumulated depreciation—equipment (11,100 ) Intangible assets—patents 40,100 Total $2,494,100 Total $2,494,100 The following information is available for the 2020 fiscal year: 1. Net income was $392,000. 2. Equipment (cost of $20,100 and accumulated depreciation of $8,010) was sold for $10,100. 3. Depreciation expense was $4,010 on the building and $9,010 on equipment. 4. Amortization expense on a patent was $3,010. 5. Current assets other than cash increased by $30,000. Current liabilities increased by $14,000. 6. An addition to a building was completed at a cost of $31,100. 7. An FV-OCI investment in shares was purchased for $20,600 on the last day of the ye ar. This was the first such investment made by Ayayai in its history. 8. Bonds payable of $75,100 were issued at par. 9. Cash dividends of $181,000 were declared and paid. Dividends paid are treated as financing activities. Ayayai prepares financial statements in accordance with IFRS. 1. Prepare a statement of financial position (SFP) as at December 31, 2020. (Hint: You will need to adjust (“plug”) the December 31, 2020 amount of current assets to ensure the SFP balances.) (List Property, Plant and Equipment in order of Land, Buildings and Equipment.) 2.Prepare a statement of cash flows for the year ended December 31, 2020, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Required 1 :
Ayayai Corporation
Statement of Financial position
December 31,2019
Assets
Current assets ($1,115,000+30,000+246,520(See Required 2 ))			$ 1,391,520
FV-OCI Investments			$ 20,600
Property , Plant and Equipment :
Land		$ 30,100
Buildings ($1,130,000+$ 31,100 )	$ 1,161,100
Less: Accumulated Depreciation(131,000+4,010)	($135,010)	$ 1,026,090
Equipment (321,000 -20,100)	$ 300,900
Less: Accumulated Depreciation (11,100 -8,010 +9,010)	($12,100)	$ 288,800
Total Property , Plant and Equipment			$ 1,344,990
Intangible Assets-Patents , Net ($40,100 -3,010)			$ 37,090
Total Assets			$ 2,794,200
Liabilities and shareholders' Equity :
Current Liabilities(1,027,100+14,000)			$ 1,041,100
Long term liabilities
Bonds Payable (1,111,000 +75,100 )			$ 1,186,100
Total Liabilities			$ 2,227,200
Shareholders' Equity :
Common shares		$ 181,000
Retained Earnings (175,000+392,000-181,000)		$ 386,000
Total Shareholders' Equity			$ 567,000
Total Liabilities and shareholders' Equity			$ 2,794,200

Ayayai Corporation
Statement of Cash Flows (Indirect Method )
For the Year Ended December 31,2019
Cash flows from operating Activities :
Net Income		$ 392,000
Adjustments to reconcile net Income to
Net Cash provided by Operating Activities
Loss on Sale of Equipment (20,100-8,010 -10,100)	$ 1,990
Depreciation Expense(4,010 +9,010 )	$ 13,020
Patent Amortization Expense	$ 3,010
Increase in Current assets (Other than Cash )	($30,000)
Increase in Current Liabilities	$ 14,000	$ 2,020
Net Cash provided by Operating Activities		$ 394,020
Cash flows from Investing Activities :
Proceeds from Sale of equipment	$ 10,100
Addition to Buildings	($31,100)
Purchase of FV -OCI Investments	($20,600)
Net Cash used by Investing Activities		($41,600)
Cash flows from Financing Activities :
Issuance of Bonds	$ 75,100
Payments of Dividends	($181,000)
Net Cash used by Financing Activities		($105,900)
Net Increase in Cash		$ 246,520