Question

The records of Koop Co. provided the following information for the year ended 31 December 20X8:

 

 

Additional information:

a. Sold equipment for cash (cost, $30,000; accumulated depreciation, $18,000).

b. Purchased land, $40,000 cash.

c. Acquired land for $42,000 and issued common shares as payment in full.

d. Acquired equipment, cost $32,000; issued a $32,000, three-year, interest-bearing note payable.

 

Required:

Prepare the SCF, using the two-step indirect method. Analyze every account to ensure all changes are included. Assume unexplained changes are from logical sources. Include required note disclosure of non-cash transactions. Prepare separate disclosure of cash paid for interest and income tax, as is required by ASPE.

Answer 1

KOOP COMPANY

Statement of Cash Flows

Year ended 31 December 20x8

 

Disclosure note: 

Non-cash transaction, land of $42,000 acquired for common shares. 

Non-cash transaction, equipment of $32,000 acquired for note payable.

 

Cash paid for interest  ($4,000 - $2,000)                    ($2,000)

Cash paid for income tax ($16,000 - $11,000)           ($5,000)

Cash paid for interest  ($4,000 - $2,000)                    ($2,000)

Cash paid for income tax ($16,000 - $11,000)           ($5,000)