ARDUOUS COMPANY
Statement of Cash Flows
For year ended December 31, 2016
($ in millions)
Cash flows from operating activities:
Net income
Adjustments for noncash effects:
Depreciation expense
Patent amortization expense
Loss on machine damage
Amortization of discount
Changes in operating assets and liabilities:
Increase in investment due to equity method income
Decrease in accounts receivable
Increase in investment revenue receivable
Increase in inventory
Decrease in prepaid insurance
Decrease in accounts payable
Decrease in salaries payable
Increase in interest payable
THIS ONE IS MISSING
Decrease in income tax payable
Increase in deferred tax liability
Net cash flows from operating activities		$0
Cash flows from investing activities:
Purchase of land - cash portion
Purchase of long-term investment
Sale of machine components
Net cash flows from investing activities		0
Cash flows from financing activities:
Retirement of bonds payable
Sale of preferred stock
Purchase of treasury stock
Payment of cash dividends
Net cash flows from financing activities		0
Net increase in cash
Cash balance, January 1
Cash balance, December 31		$0
Noncash investing and financing activities:
Acquired building with lease
Acquired land with cash and note

The comparative balance sheets for 2016 and 2015 and the income statement for 2016 are given below for Arduous Company. Additional information from Arduous's accounting records is provided also ARDUOUS COMPANY Comparative Balance Sheets December 31, 2016 and 2015 (S in millions) 2016 2015 Assets Cash Accounts receivable Investment revenue receivable Inventory Prepaid insurance Long-term investment Land Buildings and equipment $ 156 $ 101 234 210 27 228 25 217 256 432 24 220 145 170 440 (118) (160) Less: Accumulated depreciation Patent 52 $1,485 $1,262 Liabilities Accounts payable $ 70 $ 105 38 24 40 28 alaries payable Bond interest payable Income tax payable Deferred income tax liability Notes payable Lease liability Bonds payable 27 29 32 51 43 102 235 315 (42) (50) Less: Discount on bonds Shareholders' Equity Common stock Paid-in capital-excess of par Preferred stock Retained earnings 458 115 95 299 (29) 430 105 227 Less: Treasury stoclk $1,485 $1,262 ARDUOUS COMPANY Income Statement For Year Ended December 31, 2016 (S in millions) Revenues and gain: Sales revenue $600 Investment revenue Gain on sale of treasury bills 31 3 $634 Expenses and loss: Cost of goods sold Salaries expense Depreciation expense Patent amortization expense Insurance expense Bond interest expense Loss on machine damage Income tax expense 200 93 13 27 48 56 473 $161 Net income Additional information from the accounting records Investment revenue includes Arduous Company's $27 million share of the net income of Demur Company, an equity method investee b. Treasury bills were sold during 2016 at a gain of $3 million. Arduous Company classifies its investments in Treasury bills as cash equivalents c. A machine originally costing $110 million that was one-half depreciated was rendered unusable by a flood. Most major components of the machine were unharmed and were sold for $22 million d. Temporary differences between pretax accounting income and taxable income caused the deferred income tax liability to increase by $23 million e. The preferred stock of Tory Corporation was purchased for $45 million as a long-term investment f. Land costing S86 million was acquired by issuing $43 million cash and a 15%, four-year, $43 million note payable to the seller g. The right to use a building was acquired with a 15-year lease agreement; present value of lease yi, 11illconi. h. $80 mllion of bonds were retired at maturity i. In February, Arduous issued a stock dividend (5 million shares). The market price of the $7 par value common stock was $9.50 per share at that time. j. In April, 1 million shares of common stock were repurchased as treasury stock at a cost of $29 million. Required: Prepare the statement of cash flows for Arduous Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Do not round your intermediate calculations. Enter your answers in millions (i.e., 10,000,000 should be entered as 10.).) The comparative balance sheets for 2016 and 2015 and the income statement for 2016 are given below for Arduous Company. Additional information from Arduous's accounting records is provided also ARDUOUS COMPANY Comparative Balance Sheets December 31, 2016 and 2015 (S in millions) 2016 2015 Assets Cash Accounts receivable Investment revenue receivable Inventory Prepaid insurance Long-term investment Land Buildings and equipment $ 156 $ 101 234 210 27 228 25 217 256 432 24 220 145 170 440 (118) (160) Less: Accumulated depreciation Patent 52 $1,485 $1,262 Liabilities Accounts payable $ 70 $ 105 38 24 40 28 alaries payable Bond interest payable Income tax payable Deferred income tax liability Notes payable Lease liability Bonds payable 27 29 32 51 43 102 235 315 (42) (50) Less: Discount on bonds Shareholders' Equity Common stock Paid-in capital-excess of par Preferred stock Retained earnings 458 115 95 299 (29) 430 105 227 Less: Treasury stoclk $1,485 $1,262 ARDUOUS COMPANY Income Statement For Year Ended December 31, 2016 (S in millions) Revenues and gain: Sales revenue $600 Investment revenue Gain on sale of treasury bills 31 3 $634 Expenses and loss: Cost of goods sold Salaries expense Depreciation expense Patent amortization expense Insurance expense Bond interest expense Loss on machine damage Income tax expense 200 93 13 27 48 56 473 $161 Net income Additional information from the accounting records Investment revenue includes Arduous Company's $27 million share of the net income of Demur Company, an equity method investee b. Treasury bills were sold during 2016 at a gain of $3 million. Arduous Company classifies its investments in Treasury bills as cash equivalents c. A machine originally costing $110 million that was one-half depreciated was rendered unusable by a flood. Most major components of the machine were unharmed and were sold for $22 million d. Temporary differences between pretax accounting income and taxable income caused the deferred income tax liability to increase by $23 million e. The preferred stock of Tory Corporation was purchased for $45 million as a long-term investment f. Land costing S86 million was acquired by issuing $43 million cash and a 15%, four-year, $43 million note payable to the seller g. The right to use a building was acquired with a 15-year lease agreement; present value of lease yi, 11illconi. h. $80 mllion of bonds were retired at maturity i. In February, Arduous issued a stock dividend (5 million shares). The market price of the $7 par value common stock was $9.50 per share at that time. j. In April, 1 million shares of common stock were repurchased as treasury stock at a cost of $29 million. Required: Prepare the statement of cash flows for Arduous Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Do not round your intermediate calculations. Enter your answers in millions (i.e., 10,000,000 should be entered as 10.).)