2. Extracts from the financial statements of Honeydew plc for the year ended 31 March 2020 are as follows: Statement of Profit or Loss for the year ended 31 March 2020 Profit from operations 603,000 Finance costs _(85.000) Profit before tax 518,000 Income tax (168,000) Profit for year 350,000 2019 Statements of Financial Position at 31 March 2020 ASSETS Non-current assets Property, plant and equipment 4,443,750 Intangible assets 206,250 4,250,000 68,750 Current assets Inventories Trade receivables 606,250 312,500 452,500 375,000 Cash and cash equivalents Total assets 413.750 5,982,500 152.500 5,298,750 EQUITY AND LIABILITIES Equity Equity share capital (1 shares) Share premium Retained earnings 1,250,000 500,000 2,441,250 1,037,500 337,500 2,128,750 Non-current liabilities Borrowings 1,037,500 1,250,000 Current liabilities Total equity and liabilities 753.750 5,982,500 545.000 5,298,750 The following information is relevant: (i) Current liabilities Tax liability Trade payables Accruals 2020 306,250 326,250 121.250 753,750 2019 287,500 187,500 70,000 545,000 Question Continued (ii) Included in profit from operations is a loss of 85,000 in respect of the disposal of machinery in the year. This machinery had a carrying amount of 620,000 at the disposal date. (iii) Included in trade payables at 31 March 2020 is an amount of 72,000 in respect of a purchase of an item of property, plant and equipment in the year that has not yet been paid for. (iv) Included in accruals at 31 March 2020 is accrued interest of 17,500. The corresponding figure for 2019 is 36,000. (v) The depreciation charge for the year was 265,000. (vi) Intangible assets costing 155,000 were purchased for cash during the year. There were no disposals of intangible assets. (vii) On 1 April 2019 Honeydew plc made a 1 for 10 bonus issue from share premium. An issue for cash was made later in the year. Requirement (a) Prepare a Statement of Cash Flows for Honeydew plc for the year ended 31 March 2020 using the indirect method in accordance with IAS 7. (31 marks) (b) Using Honeydew plc as an example, explain the treatment of non-current assets in the cashflow statement. (5 marks) (max 150 words for part b) (Total: 36 marks)