Ashley Limited, which follows IFRS, chooses to classify interest and dividends received as well as interest paid as operating activities and dividends paid as financing activities. Ashley had the following information available at the end of 2017:

Instructions (a) Prepare a statement of cash flows for Ashley Limited using the direct method, accompanied by a schedule that provides cash flow from operations using the indirect approach. (b) Does Ashley Limited have any options available for the classification of interest and dividends paid or received? (c) Prepare a memo for top management that summarizes and comments on Ashleys cash activities in 2017.

ASHLEY LIMITED Comparative Statement of Financial Position December 31, 2017 and 2016 2017 Cash $ 25,400 Accounts receivable 13,500 FV-NI investments 20,000 Inventory 42,000 Prepaid rent 7,000 Prepaid insurance 2,100 Office supplies 1,000 Land 125,000 Buildings 350,000 Accumulated depreciation buildings (105,000) Equipment 525,000 Accumulated depreciation equipment (130,000) Patents 90,000 Accumulated amortization-patents (45,000) Total assets $921,000 Temporary bank overdraft Accounts payable 22,000 Income tax payable 5,000 Salaries and wages payable 5,000 Short-term notes payable (trade) 10,000 Long-term notes payable (non-trade) 60,000 Deferred tax liability 30,000 Bonds payable 375,000 Common shares 260,000 Retained earnings 154,000 Total liabilities and shareholders' equity $921,000 2016 -0- 16,950 30,000 35,000 12,000 900 750 175,000 350,000 (87,500) 400,000 (112,000) 90,000 (40,000) $ 871,100 12,000 20,000 6,000 1,000 10,000 70,000 25,000 375,000 237,500 114,600 $ 871,100 ASHLEY LIMITED Income Statement Year Ended December 31, 2017 Sales revenue $1,160,000 Cost of goods sold (748,000) Gross margin 412,000 Operating expenses Selling expenses $ 39,200 Administrative expenses 124,700 Salaries and wages expense 92,000 Depreciation and amortization expense 40,500 Total operating expenses (296,400) Income from operations 115,600 Other revenues/expenses Gain on sale of land 8,000 Investment income (Note 1) 6,400 Interest expense (41,750) (27,350) Income before taxes 88,250 Income tax expense (29,400) Net income $ 58,850 Note 1: Investment income generated by (FV-NI) investments includes dividend income of $2,400 and a gain on sale of investments of $4,000