Question
McCoy Ltd. Statement of Cash Flows Below is the comparative balance sheet and statement of comprehensive income for McCoy Ltd., a company that reports under
McCoy Ltd.
Statement of Cash Flows
Below is the comparative balance sheet and statement of comprehensive income for McCoy Ltd., a company that reports under IFRS:
Additional information:
1.During 2020, the company purchased new equipment in exchange for $25,000 in common shares and new equipment for $10,000 cash. Old equipment was sold for cash.
2.Cash dividends were paid during 2020. No share dividends were declared. During 2020, McCoy repurchased common shares for $3,000 cash, which matched the book value of the common shares on that date.
3.During 2020, a trademark was purchased for $20,000 cash.
4.The Company accounts for its Investment in land using the fair value model through other comprehensive income. There were no sales or purchases in this account during the year. In prior years, there were no differences in fair value compared to the book value for the investment in land.
5.The Company accounts for its short-term investments using the fair value through net income (held for trading) approach. During 2020, short-term investments with a carrying
value of $31,000 were sold for $27,500. The fair value of the short-term investments at year-end equaled the carrying value, so no unrealized gain or loss was incurred.
6.McCoy owns 35% of LaForge Inc. and accounts for this investment using the equity method. Dividends from LaForge Inc. were received during the year and the associate reported net income of $175,000.
7.To save on interest expense, the Company retired $40,000 in bonds and reissued new bonds at a lower interest rate.
8.The Company's policy is to report dividends received as an investing activity, interest paid as an operating activity and dividends paid as a financing activity.
Required:
1.Using the indirect method, prepare the cash flows from operating activities section of the statement of cash flows for the year ended December 31, 2020.
2.Using the direct method:
a)Prepare the cash flows from operating activities section of the statement of cash flows for the year ended December 31, 2020.
b)Prepare a worksheet for McCoy Ltd. to determine the net cash flow from operating activities.
3.Prepare the cash flows from investing activities section of the statement of cash flows for the year ended December 31, 2020.
4.Prepare the cash flows from financing activities section of the statement of cash flows for the year ended December 31, 2020.
5.Using the indirect method, prepare a statement of cash flows in good form with all required disclosures for the year ended December 31, 2020.
6.Conduct a basic analysis of McCoy Ltd.'s cash management including cash coverage ratios and free cash flow.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started