CASH FLOW STATEMENT Company 1 Financial position Assets Note 31-Dec-16 31-Dec-15 Non-current assets Plant and equipment (including 1,2 18,000 20,000 leased items) Inventory Trade receivables Cash Total assets Equity and liabilities Equity shares of $1 each Retained earnings Lease liability Trade payables (for inventory) Total equity and liabilities 16,000 15,000 15,000 8,000 10,000 59,000 43,000 21,200 15,000 12,400 12,000 2 5,400 4,000 20,000 12,000 Company 1 Income statement for 2016 59,000 43,000 Note For 2016 Revenue 15,000 Cost of sales (20,000) Depreciation (2,000) Profit from sale of equipment 1 8,000 Operating profit 1,000 Interest on lease liability 2 (400) Income tax expense (200) Profit for the year (Net income) 400 All numbers are in $'000 Note 1. One unit of equipment for sold for $12000. Note 2. The following table illustrates changes in lease liability during 2016 reporting period: Beginning balance Interest expense at 10% 4,000 X 10% = 400 Lease payment (1,000) New leases (equipment) Ending balance 5,400 4,000 2,000 Lease payment is allocated to interest first, meaning that redemption of principal part of lease liability was 1,000-400 = 600.