Question 2 The balance sheets of Capello Ltd as at 31 December 2020 and 2019 and a summary of the income statement for the year ended 31 December 2020 are as follows: Balance Sheets as at 31 December 2020 2019 $'000 $'000 Non-current (fixed) assets Land and buildings Plant and machinery 800 294 1,094 596 276 872 Current assets Inventory (stock) Trade receivables (Debtors) Cash at bank 84 74 93 86 7 186 1,280 Total assets la 164 1,036 Equity and liabilities Ordinary share capital Share premium Revaluation reserve Retained earnings Total equity Non-current liabilities Debentures 30 70 100 444 644 25 65 80 206 376 243 256 Current liabilities Trade payables (creditors) Interest payable Current tax payable Bank overdraft 153 10 113 117 393 636 1,280 155 14 116 119 404 660 1,036 Total liabilities Total equity and liabilities You are given the following information: (1) The income statement for the year ended 31 December 2020 includes the following items: $'000 Depreciation charge on plant and machinery 40 Interest charge 25 Tax charge 56 Dividends paid 38 (2) During the year plant and machinery were disposed of for $15,000. These machines had a total original cost of $45,000 and had accumulated depreciation at the date of sale of $12,000. (3) During the year, a rights issue was made. Requirements: Prepare a cash flow statement, for Capello Limited for the year ended 31 December 2020. (20 marks) Discuss the advantages and disadvantages of such statements. (5 marks) (b) Total 25 marks