Question

Sheffield Corp.’s statement of financial position at the end of 2019 included the following items: Current assets $1,145,000 Current liabilities $1,115,000 Land 30,900 Bonds payable 1,231,000 Buildings 1,320,000 Common shares 181,000 Equipment 331,000 Retained earnings 186,000 Accumulated depreciation—buildings (144,000 ) Accumulated depreciation—equipment (11,800 ) Intangible assets—patents 41,900 Total $2,713,000 Total $2,713,000 The following information is available for the 2020 fiscal year: 1. Net income was $405,000. 2. Equipment (cost of $21,500 and accumulated depreciation of $8,080) was sold for $11,800. 3. Depreciation expense was $4,060 on the building and $9,170 on equipment. 4. Amortization expense on a patent was $3,020. 5. Current assets other than cash increased by $30,000. Current liabilities increased by $16,000. 6. An addition to a building was completed at a cost of $32,900. 7. An FV-OCI investment in shares was purchased for $22,200 on the last day of the year. This was the first such investment made by Sheffield in its history. 8. Bonds payable of $76,700 were issued at par. 9. Cash dividends of $181,000 were declared and paid. Dividends paid are treated as financing activities. Sheffield prepares financial statements in accordance with IFRS. ( statement of cash flow and statement of financial position as per IFRS)

Answer 1

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Step 1

Cash Flow Statement is an account prepared in the end of financial year to calculate the amount of cash and cash equivalents held by the company. The sources of inflow and outflow of cash are classified in following categories:

1. Operating Activities
2. Investing Activities
3. Financing Activities

Statement of financial position also known as balance sheet is the account showing the year ending balances of assets and liabilities held by the firm. The classification of balance sheet items can be done as:

1. Shareholder's Fund
2. Non current Liabilities
3. Current Liabilities
4. Non-Current Assets
5. Current Assets

Step 2

Cash Flow Statement for year ending 2020

Particulars	Amount ($)
Cash Flow from Operating Activities
Net Income	405,000
Add: Depreciation	13,230
Loss of sale of assets	1,620
Amortization of patents	3,020
Operating Profit Before Working Capital Changes	422,870
Less: Increase in current assets	(30,000)
Add: Increase in current liabilities	16,000
Net cash flow from operating activities	408,870
Cash Flow from Investing Activities
Proceeds from sale of equipment	11,800
Addition to building	(32,900)
Purchase of FV-OCI investment	(22,200)
Net cash flow from investing activities	(43,300)
Cash Flow From Financing Activities
Proceeds from issue of bonds	76,700
Cash Dividends paid	(181,000)
Net cash flow from financing activities	(104,300)
Net increase in cash and cash equivalents	261,270
Add: Cash and cash equivalents at beginning of year	0
Cash and cash equivalents at end of year	261,270

Balance sheet for the year ending 31 December 2020

December 2020

Particulars	Amount($)
I. Equity and Liabilities
1) Shareholder's Fund
Share Capital	181,000
Reserves and surplus	410,000
2) Non-Current Liabilities
Long term Borrowings	1,307,700
3) Current Liabilities	1,131,000
TOTAL	3,029,700
II. Assets
1) Non-Current Assets
Fixed Assets
Tangible Assets	1,554,550
Intangible Assets	38,880
2) Current Assets	1,175,000
Cash and cash equivalents	261,270
TOTAL	3,029,700