1. Following the 4-step approach of preparation of statement of cash flows to prepare the 2020 statement of cash flows for Newport. Clearly mark each step. For Step #4, using the indirect method for the operating activities. What additional information should Newport disclose if the indirect method is used for statement of cash flows?
2. Prepare the operating activities portion of the statement of cash flows using the direct method and the analysis in Part 2. What additional information should Newport disclose if the direct method statement of cash flows is reported?

Newport Ltd. adheres to IFRS and classifies interest paid as operating cash flow and dividends paid and financing cash flow. Newport's financial statements for 2020 and 2019 are provided below: Statements of Financial Position Dec 31/20 Cash $ 21,000 Accounts receivable 33,000 Merchandise inventory 55,000 Land 35,000 Property, plant and equipment. $ 126,000 Less accumulated depreciation (40.000 86.000 Total Assets $ 230.000 Dec 31/19 $ 24,000 27,000 50,000 10,000 $ 120,000 138,000) 82.000 $ 193.000 Accounts payable payable Bonds payable. Common shares Retained earnings Total Liabilities & Shareholders' Equity $ 22,000 44,000 105,000 17,000 42,000 $ 230.000 $ 12,000 49,000 75,000 27,000 30.000 $ 193.000 Income Statement Year ended December 31, 2020 Sales... Cost of sales Selling and administrative expenses. Income from operations.. Loss on sales of equipment Interest expense Income before taxes. Income taxes. Net income $ 1,050,000 894,000 93.000 63,000 6,000 9.000 48,000 12.000 $36.000 i. cash. The following additional data were provided for calendar 2020: Land was purchased with a note issued directly to the seller. Additional notes were issued for ii. Equipment with an originally cost $44,000 and a book value of $26,000 was sold at a loss. New equipment was purchased for cash. iv. Depreciation expense was included in the Selling and administrative expenses. Additional share was issued for cash Cash dividends were declared and paid. ILI. v. vi