QUESTION 1 (25 MARKS) Sparrow Berhad reported the following Statement of Profit or Loss and Comparative Statement of Financial Position for 2015, along with transaction data for 2015: Sparrow Berhad Statement of Profit or Loss for the Year Ended 31st December 2015 RM 662,000 560,000) RM Sales revenue Cost of goods sold Gross profit Operating expenses: Salary expenses 102,000 46,000 Depreciation expense, equipment7,000 Amortization expense, patent Rent expense Total operating expenses 3,000 2,000 Profit from operations Other items: (58,000) 44,000 Loss on sale of equipment Profit before income tax Income tax expense Net profit (2,000) 42,000 16,000) 26,000 Sparrow Berhad Statement of Financial Position as at 31st December 2015 RM 2014 RM 2015 Non-current assets Long term investments Equipment, net Patent, net 18,000 10,000 67,000 52,000 44,000 10,000 129,000 72,000 Current assets Cash & cash equivalents Accounts receivable Inventories Prepaid expenses Total assets 19,000 3,000 22,000 23,000 34,000 31,000 1,000 3,000 205,000 132,000 Long term liabilities Long term note payable Bonds payable 44,000 40,00053,000 88,00053,000 Current liabilities Account payable Accrued liabilities Income tax payable 35,00026,000 7,000 9,000 10,000 10,000 52,000 45,000 Owners' equity Paid-up capital, ordinary shares Capital redemption reserve Retained earnings Total liabilities and equity 42,00015,000 0,0005,000 7,000 14,00 205,000 132,000 Purchase of equipment Payment of cash dividends Purchase of long- term investment Issuance of long-term note payable to borrow cash Issuance for ordinary shares for cash Sale of equipment (book value, RM76,000) Share buyback (paid par value) RM 98,000 18,000 8,000 7,000 19,000 74,000 5,000 Required: a) Prepare Sparrow's Sdn Bhd cash flow statement for the year ended 31st December 2015 using indirect method. (23 marks) b) Explain TWO (2) purposes of cash flow statement