The following are selected statement of financial position accounts of Pavicevic Ltd. at December 31, 2022 and 2023, and the increases or decreases in each account from 2022 to 2023. Also presented is the selected income statement and other information for the year ended December 31, 2023.

Additional information:

1. During 2023, equipment costing $45,000 was sold for cash.

2. Accounts receivable relate to sale of inventory.

3. During 2023, $20,000 of bonds payable were issued in exchange for property, plant, and equipment. All bonds were issued at par.

4. During the year, short-term investments accounted for at FV-NI with a carrying amount of $17,000 were sold. Additional investments were purchased.

Instructions

a. Determine the category (operating, investing, or financing) and the amount that should be reported in the statement of cash flows for the following items. Assume Pavicevic follows IFRS and has chosen to report cash dividends received and paid as operating activities and interest received and paid as operating activities.

1. Cash received from customers

2. Payments for purchases of property, plant, and equipment 

3. Proceeds from the sale of equipment

4. Cash dividends paid

5. Redemption of bonds payable

6. Proceeds from the sale of FV-NI investments

7. Purchase of FV-NI investments

b. Assume now that Pavicevic follows ASPE.

1. What choices could the company have made in the classification of cash flows?

2. What difference would following ASPE have had in presenting the activities listed in part (a)?

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Statement of Financial Position (selected accounts) 2023 2022 Assets Accounts receivable FV-NI investments Property, plant, and equipment Accumulated depreciation Liabilities and Shareholders' Equity Bonds payable Dividends payable Common shares Retained earnings $ 84,000 41,000 177,000 (78,000) 149,000 8,000 31,000 104,000 Sales revenue Depreciation expense Gain on disposal of FV-NI investments Unrealized loss on FV-NI investments $ 74,000 49,000 147,000 (67,000) Income Statement (selected information) For the Year Ended December 31, 2023 Gain on disposal of equipment Net income 146,000 5,000 22,000 91,000 Increase (Decrease) $295,000 33,000 5,000 3,000 14,500 31,000 $10,000 (8,000) 30,000 11,000 3,000 3,000 9,000 13,000