Preparing a statement of cash flows with notes    LO2, 3, 5, 6 The statement of profit or loss and other comprehensive income and comparative statements of financial position of Blue Ltd were as follows. BLUE LTD Statement of financial position as at 31 December 2018 2019 Current assets Cash at bank $ 46 000 $ 52 000 Cash deposits (30-day) 40 000 70 000 Accounts receivable 110 000 117 000 Allowance for doubtful debts (12 000) (16 000) Interest receivable 2 000 3 000 Inventories 294 000 320 000 Prepayments 13 000 9 000 $ 493 000 $ 555 000 Non-current assets Land $ 100 000 $ 140 000 Plant 600 000 700 000 Accumulated depreciation (140 000) (180 000) Investments in associate 80 000 92 000 Brand names 120 000 90 000 760 000 842 000 Total assets $1 253 000 $1 397 000 Current liabilities Accounts payable $ 180 000 $ 196 000 Accrued liabilities 85 000 92 000 Current tax payable 40 000 43 000 Current portion of long-term borrowings 20 000 20 000 $ 325 000 $ 351 000 Non-current liabilities Borrowings $ 98 000 $ 138 000 Deferred tax liability 35 000 40 000 Provision for employee benefits 40 000 43 000 173 000 221 000 Total liabilities $ 498 000 $ 572 000 Equity Share capital $ 500 000 $ 530 000 Retained earnings 255 000 295 000 755 000 825 000 Total liabilities and equity $1 253 000 $1 397 000 BLUE LTD Statement of profit or loss and other comprehensive income for the year ended 31 December 2019 Sales $ 1 780 000 Cost of sales (1 030 000) Gross profit 750 000 Interest 2 000 Share of profits of associate 20 000 Gain on sale of plant 8 000 Total income $ 780 000 Expenses Salaries and wages $ 352 000 Depreciation 50 000 Discount allowed 8 000 Doubtful debts 6 000 Interest 21 000 Other (including impairment of brand names $30 000) 186 000 623 000 Profit before tax 157 000 Income tax expense (47 000) Profit for the period 110 000 Other comprehensive income — Total comprehensive income $ 110 000 The following additional information has been extracted from the accounting records of Blue Ltd.

(a) 30-day cash deposits are used in the course of the daily cash management of the company.

(b) Movement in allowance for doubtful debts: Balance 31 December 2018 $ 12 000 Charge for year 6 000 Bad debts written off (2 000) Balance 31 December 2019 $ 16 000

(c) Land Additional cash purchase $ 40 000

(d) Plant Purchases for year (including $50 000 acquired by a lease) $150 000

(e) Disposals of plant Cost of disposals $ 50 000 Accumulated depreciation (10 000)

(f) Investments in associate Share of profit $ 20 000 Dividends received 8 000 (g) Accounts payable Includes amounts owing in respect of plant purchases: 31 December 2018 $ 12 000 31 December 2019 18 000 (h) Accrued liabilities Includes accrued interest payable: 31 December 2018 $ 4 000 31 December 2019 5 000 (i) Income tax expense comprises: Current tax payable $ 42 000 Deferred tax 5 000 Income tax expense $ 47 000 (j) Dividends paid Under a dividend reinvestment scheme, shareholders have the right to receive additional shares in lieu of cash dividends. Dividends paid comprised: Dividends paid in cash during the year $ 40 000 Dividends reinvested 30 000 Total dividends $ 70 000 Required 1. Using the direct method of presenting cash flows from operating activities, prepare a statement of cash flows in accordance with AASB 107/IAS 7 for the year ended 31 December 2019. 2. Prepare a note reconciling profit to cash flows from operating activities in accordance with AASB 1054. 3. Prepare any other notes to the statement of cash flows that you consider are required by AASB 107/IAS 7.