Question 1 - Statement of Cash Flows The statements of financial position of Derek Landy Ltd. for the past two years and the company's most recent statement of profit or loss are set out below: Statement of Profit or Loss for the year ended 31 October 2020 Revenue Cost of sales 67,200 (36,960) Gross profit 30,240 Gain on disposal of property, plant, and equipment 672 Distribution costs (14,112) Administrative expenses (6,720) Operating profit 10,080 Interest on loans (273) Profit before tax Tax expenses 9,807 (4,032) Profit for the year 5,775 Statement of Financial Position as at 31 October Assets Non-current assets 2020 2019 Property, plant, and equipment 75,513 72,300 Current assets Inventories 11,088 7,392 Receivables 10,080 7,392 Cash & cash equivalents 0 21,168 387 15,171 Total assets 96,681 87,471 Equity Share capital 6,600 6,000 Share premium account 2,400 1,500 Retained earnings 74,970 83,970 69,195 76,695 Liabilities Non-current liabilities Bank loans Current liabilities Payables Current tax liability Bank overdraft Total equity & liabilities Additional information: i. ii. 3,900 2,400 3,696 5,544 4,032 2832 1,083 8,811 0 8,376 96,681 87,471 The total depreciation charge for the year was 10,635 Property, plant, and equipment costing 2,928 with accumulated depreciation of 1,065 was sold during the year at a profit of 672 iii. All sales and purchases were on credit. iv. Other expenses were paid for in cash. V. No dividends were paid during the year. Required a) Prepare a statement of cash flows for Derek Landy Ltd. for the year ended 31 October 2020 using the indirect method. [20 marks] b) International Financial Reporting standards include IAS 7 - Statement of Cash Flows. The standard prescribes how to present information about how an entity's cash and cash equivalents changed during the period. Briefly explain how adherence to IAS 7 enhances the usefulness of the financial information, particularly in an international context? [5 marks]