Zippo€™s financial statements as at December 31, 2016, appear below:

Zippo Ltd.
Income Statement
For the Year Ended December 31, 2016
Sales .................................................................................................... $2,511,100
Cost of goods sold .............................................................................   1,256,000
Gross profit .........................................................................................   1,255,100
Depreciation of property, plant, and equipment ...........................   334,400
Interest expense .................................................................................        75,000
Other expenses ...................................................................................      256,600
Income before income taxes .............................................................      589,100
Income taxes ........................................................................................      300,000
Net income ...........................................................................................   $ 289,100

Additional information:

• Property, plant, and equipment costing $570,000 was sold for $422,000.
• 100,000 ordinary shares were issued to acquire $450,000 of property, plant, and equipment.
• $212,000 of deferred development costs were capitalized during the year.
• The company nets many items to €œOther Expenses,€ for example, gains and losses on fixed asset sales and some amortization.
• The deferred product development expenditures were all paid in cash.
• The decrease in the bonds payable account was due to the amortization of the premium.
• Zippo has elected to designate its at fair value through profit or loss investments as cash equivalents.
• Zippo has adopted a policy of classifying cash outflows from interest and dividends as financing activities.

Required:
a. Prepare a statement of cash flows for Zippo Ltd. for 2016 using the indirect method.
b. Identify what supplemental disclosure, if any, is required
c. Based on your analysis of Zippo€™s cash flow activities during the year, do you think that you should consider investing in the company?Why or why not?

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Zippo Ltd. Comparative Balance Sheet As at December 31, 2015 and 2016 2016 2015 $ 160,000 $ 100,000 Cash At fair value through profit or loss investments 12,000 10,000 Accounts receivable 300,000 375,000 Less allowance for bad debts and doubtful accounts (10,000) (15,000) 575,000 Inventory 498,000 Property, plant, and equipment 1,984,000 1,396,000 Less accumulated depreciation (650,400) (487,000) Intangibles, net 135,000 126,000 Deferred product development costs 564,000 417,000 2,429,000 3,060,600 Accounts payable 81,000 84,000 Income taxes payable 12,000 2,000 Bonds payable 659,500 674,000 Ordinary shares 1,150,000 700,000 Retained earnings 1,158,100 969,000 $3,060,600 $2,429,000