Neilson Corp. reported $245,000 of net income for 2020. In preparing the statement of cash flows, the accountant noted several items that might affect cash flows from operating activities. 

1. During 2020, Neilson reported a sale of equipment for $7,000. The equipment had a carrying amount of $23,500. 

2. During 2020, Neilson sold 100 Lontel Corporation common shares at $200 per share. The acquisition cost (and fair value of these shares on December 31, 2019) was $145 per share. This investment was shown on Neilson's December 31, 2019 SFP as an investment at fair value with gains and losses in net income (NI). 

3. During 2020, Neilson corrected an error in ending inventory of December 31, 2019. The debit to opening retained earnings was $14,600. The cost of goods sold in the current income statement was adjusted accordingly. 

4. During 2020, Neilson revised its estimate for bad debts. Before 2020, Neilson's bad debt expense was 1% of its net sales. In 2020, this percentage was increased to 2%. Net sales for 2020 were $500,000, and net accounts receivable decreased by $5,000 during 2020. 

5. During 2020, Neilson issued 500 common shares in exchange for a patent. The shares' market value on the transaction date was $23 per share. 

6. Depreciation expense for 2020 was $48,000. 

7. Neilson Corp. holds 30% of Nirbana Corporation's common shares as a long-term investment and exercises significant influence. Nirbana reported $27,000 of net income for 2020. 

8. Nirbana Corporation paid a total of $2,800 of cash dividends to all shareholders in 2020. 

9. During 2020, Neilson declared a 10% stock dividend at the shares' fair value, distributing 1,000 common shares. The market price at the date of issuance was $20 per share. 

10. Neilson Corp. paid $10,000 in dividends: $2,500 of this amount was paid on term preferred shares classified as a long-term liability. 

Instructions 

a. Prepare a schedule that shows the net cash flow from operating activities using the indirect method. Assume that no items other than the ones listed affected the calculation of 2020 cash flow from operating activities. Also assume that Neilson Corp. follows ASPE. Discuss how items not included in the operating activities would be treated. 

b. Assume now that Neilson Corp. follows IFRS. What alternatives would it have regarding interest and dividend amounts to be reported?