3 - Consolidated Statement of Cash Flows [25 marks] Kong Cheung Holdings Co. Ltd. is a conglomerate with equity stakes in two subsidiaries (90% in Best Petro Corp. and 70% Chief Properties Corp.) and two associates (40% in Diamond Retailing Inc. and 30% Easy Investment Inc.) as of December 31, 2019 (fiscal year end of 2019). In 2018, Kong Cheung Holdings acquired 70% of common shares of the subsidiary Chief Properties, 40% of common shares of the associate Diamond Retailing, and 30% of common shares of the associate Easy Investment. The equity ownership in the three companies did not change during 2019. On January 1, 2019, Kong Cheung Holdings acquired 90% of common shares of the subsidiary Best Petro, by issuing 10,000,000 of its own common shares with the market value of $3 per share and paying the remaining in cash. The table below shows the identifiable assets and liabilities and their respective fair values acquired from Best Petro. Cash Accounts receivable Inventory Property, Plant, and Equipment Accounts payable Long-term debt ($000) 1,260 13,440 11,340 31,920 12,180 2,100 During 2019, Kong Cheung Holdings and all of its subsidiaries and associates declared and paid cash dividends. Kong Cheung Holdings sold a property, which had the carrying amount of $10,080,000. In addition, salaries expense was paid in cash when incurred. There was no impairment of goodwill. There were no new long-term debts (except those acquired from Best Petro). Kong Cheung Holdings' consolidated statement of financial position and consolidated statement of comprehensive income for the fiscal year 2019 are provided below. Consolidated Statement of Financial Position As of December 31, 2019 ($000) 2019 2018 Assets Current Asset: Cash 149,868 170,100 Accounts receivable 250,656 237,552 Inventory 323,400 271,320 Subtotal of current assets 723,924 678,972 Non-current Assets: Property, Plant, and Equipment (net) 404,460 321,552 Investment in associates 176,400 168,000 Goodwill 38,514 34,944 Subtotal of non-current assets 619,374 524,496 Total Assets 1,343,298 1,203,468 Liabilities Current Liabilities: Accounts payable 336,000 325,836 Interest payable 12,600 11,340 Income tax payable 46,200 40,656 Subtotal of current liabilities 394,800 377,832 Non-current Liabilities: Long-term debt 134,400 161.280 Subtotal of non-current liabilities 134,400 161,280 Total Liabilities 529,200 539,112 Equity Share capital 401,280 371,280 Retained earnings 397,992 280,140 Non-controlling interests 14.826 12,936 Total Equity 814,098 664,356 Total Liabilities and Equity 1,343,298 1,203,468 Consolidated Statement of Comprehensive Income For the year ended December 31, 2019 Sales ($000) 1,024,800 Less: Cost of goods sold (725,340) Gross profit Less: Salaries expense Interest expense Operating income 299,460 (56,952) Depreciation expense (44,940) (12.936) 184,632 Add: Gain on disposal of property, plant, and equipment Share of profit from associates 9,912 16,800 Income before tax 211,344 Less: Income tax expense (40,572) Net income 170,772 Net income attributable to non-controlling interests Net income attributable to the group 6,720 164,052 Required: Prepare Kong Cheung Holdings' consolidated statement of cash flows with indirect method for the year ended December 31, 2019