Page 6 of 11 Question 3 The comparative statements of financial position for Victory Limited ("Victory") include the following information: Note: 2022 2021 $ Land (Note 1) 60,000 20,000 Equipment (Note 2) 90,000 75,000 Accumulated depreciation - Equipment (18,000) (1000) Investment in CK Holdings (Note 3) 20,000 0 Prepaid expenses 15,000 25,000 Inventory 65,000 45,000 Accounts receivable (net) 55,000 45,000 Cash 14.500 35.000 301.500 237,000 Share capital-ordinary 179,000 139,000 Retained earnings 7,500 5,000 Accumulated Unrealized holding gain/loss (Note 3) 5,000 0 Loan from bank 0 23,000 Bonds payable 30,000 Accrued expenses Accounts payable 15,000 15,000 65,000 $2.000 301.500 237.000 (1) Land was acquired for $40,000 in exchange for ordinary shares, par $40,000, during the year. (2) All equipment purchased was for cash. Equipment costing $10,000 (with book value of $6,000) was sold for $2,000 (3) On 1 March 2022, Victory purchased 5,000 ordinary shares from CK Holdings for $15,000. Victory classified the investment as non-trading securities. At the financial year-end, the fair value of the shares was $20,000 and CK Holdings declared and paid $0.05 cash dividends per share. (4) Net income for the year was $12,500 and cash dividends of $10,000 were declared and paid during the year. (5) The company classified interest and dividends paid as financing activities and interest and dividends received as investing activities. Required: (a) Prepare a statement of cash flows using INDIRECT METHOD for Victory Limited for the year ended 31 December 2022 (with supplementary note of non-cash investing and financing activities, if any). (22 marks) (b) Suppose Victory Limited classified the investment in CK Holdings as trading securities (instead of non-trading), how would it affect the statement of cash flows? O marks) Page 7 of 11