Valli Ltd.€™s financial statements as at December 31, 2016, appear below:

Valli Ltd.
Statement of Comprehensive Income
For the Year Ended December 31, 2016
Sales ............................................................................................................... $660,000
Cost of sales .................................................................................................. (359,000)
Gross profit ...................................................................................................    301,000
Interest expense, long term ........................................................................     (6,000)
Depreciation expense ..................................................................................   (25,000)
Operating expenses ..................................................................................... (160,000)
Other gains and losses ................................................................................      (4,000)
Income before income tax ..........................................................................    106,000
Income tax expense .....................................................................................    (39,000)
Net income ....................................................................................................      67,000
Other comprehensive income: Holding gain on at                                                      
fair value through other comprehensive income securities ....................  5,000
Comprehensive income ................................................................................$ 72,000

Supplemental information:

• During the year Valli exchanged 5,000 ordinary shares for plant assets having a fair value of $100,000.
• During the year Valli declared and issued a stock dividend of 1,000 ordinary shares. The transaction was valued at $20,000.
• During the year goodwill was written down $7,000 to reflect a permanent impairment of the asset.
• The deferred income tax liability represents temporary differences relating to the use of capital cost allowance for income tax reporting and straight-line depreciation for financial statement reporting.
• Valli did not buy or sell any at fair value through profit or loss or at fair value through other comprehensive income securities during the year. The at fair value through profit or loss securities have not been designated as cash equivalents.
• The recorded increase in the bonds payable account was due to the amortization of the discount.
• Valli elects to record interest paid as an operating activity and dividends paid as a financing activity.
• During the year Valli sold equipment (plant assets) that originally cost $40,000 for $30,000 cash.

Required:
a. From the information above, prepare Valli€™s statement of cash flows for the year ended December 31, 2016, using the indirect method.
b. Prepare Valli€™s cash flows from operating activities for the year ended December 31, 2016, using the direct method.
c. Prepare note disclosure(s) for non-cash transactions.

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Valli Ltd. Comparative Balance Sheet As at December 31, 2015 and 2016 2016 2015 $ 69,000 $ 21,000 Cash Investments-at fair value through profit or loss 22,000 25,000 Investments-at fair value through other comprehensive income 25,000 30,000 Accounts receivable 53,000 39,000 50,000 Inventory 60,000 Prepaid expenses 6,000 9,000 Plant assets 540,000 380,000 Accumulated depreciation (140,000) (125,000) Goodwill 51,000 $684,000 58,000 $489,000 $ 46,000 $ 41,000 Accounts payable Accrued liabilities 33,000 24,000 Cash dividends payable 6,000 8,000 Bonds payable 50,000 47,000 Mortgage payable 136,000 Deferred income tax liability 5,000 8,000 Preferred shares 201,000 Ordinary shares 320,000 200,000 Retained earnings 21,000 22,000 Reserves 5,000 $684,000 $489,000