8.

Teal Mountain Inc. follows IFRS and has adopted the policy of classifying interest paid as operating activities and dividends paid as financing activities. Comparative SFP accounts of Teal Mountain Inc., and its statement of income for the year ending December 31, 2020, follow: December 31 2020 2019 Change Cash $44,000 $52,000 $(8,000) Cash equivalents (Note 1) 35,000 41,900 (6.900) Accounts receivable 347,000 282,000 65.000 Prepaid insurance 17,400 34,500 (17,100) Inventory 406,000 368.100 37.900 Supplies 13,000 17,000 (4,000) Long-term investment, at equity (Note 7) 416,000 403,800 12,200 Land (Note 6) 638,000 518,000 120.000 Buildings (Note 3) 1.310.000 1.280,000 30,000 Accumulated depreciation-buildings (400,000) (360,000) (40,000) Equipment (Note 4) 634,000 641.200 (7.200) Accumulated depreciation equipment (160,000) (135,000) (25,000) Patent 100,000 100.000 -0- Accumulated amortization (40,000) (35,000) (5,000) $3,360,400 $3,208,500 $151,900 Bank overdrafts (temporary) $0 $85.900 $(85.900) Accounts payable 160,000 151,000 9,000 Income tax payable 26,000 35,000 (9,000) Accrued liabilities 55,000 41.000 14,000 Dividends payable 20.000 49,000 (29,000) Long-term notes payable 420,000 460,000 (40,000) Bonds payable 999,000 995,000 4.000 Preferred shares (Note 2) 486,000 380,000 106,000 Common shares 747,000 679,000 68,000 Retained earnings 447,400 332,600 114,800 $3,360,400 $3.208,500 $151.900 Income Statement Revenues Sales revenue $990,000 Investment income 90,000 $1,080,000 Expenses and Losses Cost of goods sold 316,000 Sales commissions expense 108.000 Operating expenses (Note 5) 166,000 Salaries and wages expense 102,000 Interest expense 91,000 Loss on disposal of equipment (Note 4) 11,000 Income tax expense 96,000 890,000 Net Income $190,000 The following is additional information about Teal Mountain's transactions during the year ended December 31, 2020. 1. The cash equivalents are typically term deposits that are very liquid and mature on average in 60 days. The bank overdrafts are temporary and reverse within a few days. Teal Mountain has opted to show these as cash and cash equivalents on its statement of cash flows. 2. 3. During the year, preferred shares with a carrying amount of $18,000 were converted to common shares. There were no disposals of buildings during the year 2020. Equipment with an original cost of $46,000 and carrying amount of $14,000 was sold at a loss during the year. 4. 5. All depreciation and amortization expense is included in operating expenses. 6. 7. During the year, Teal Mountain obtained land with a fair value of $100,000 in exchange for its preferred shares. Investment income includes the equity earnings of $62,000 from a long-term investment accounted for using the equity method and from interest revenue on the short-term investments referred to in note 1 above. Teal Mountain Inc. Statement of Cash Flows (Indirect Method) For the year ended December 31, 2020 , Cash Flows from Operating Activities Net Income/(Loss) $ 190.00 Dividends Receved from Associate Adjustments to reconcile net income to net cash provided by operating activities: Loss on Sale of Equipment V S 11,000 Depreciation Expense - Buildings 40,000 Depreciation Expense - Equipment Amortization Expense - Patent Amortization of Bond Discount Equity In Earnings of Associate Increase in Accounts Recelvable Decrease in Prepaid Insurance Increase in Inventory Decrease in Supplies Increase in Accounts Payable Decrease in Income Tax Payable Increase in Accrued Llabilities Net Cash Provided by Operating Activities Cash Flows from Investing Activities Purchase of Land V Purchase of Building Purchase of Equipment Proceeds from Sale of Equipment Net Cash Used by Investing Activities Cash Flows from Financing Activities Proceeds from Issuance of Preferred Shares V Proceeds from Issuance of Common Shares Repayment of Long-term Notes Principal Dividends Pald Net Cash Used by Financing Activities Increase in Cash and Cash Equivalents 52.00 Cash and Cash Equivalents Balance Dec 31, 2019 V Cash and Cash Equivalents Balance Dec 31, 2020 Non-cash investing and financing activities Land Obtained for Preferred Shares $ Additional disclosures: Interest Pald $ Income Taxes Pald Cash and Cash Equivalents: : 2020 2019 Cash Equivalents Cash Temporary Bank Overdrafts