QUESTION 3 A comparative statement of financial position for D'Molek Textiles Bhd containing data for the last two years is as follows: D'Molek Textiles Bhd Comparative Statement of Financial Position at 31 December 2020 2019 Assets Non-current assets: Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Financial assets at fair value through profit or loss Loans to subsidiaries RM6,340,000 1.620,000 4,720,000 RM5,200,000 1,510.000 3,690,000 120,000 428.000 5.268,000 220,000 340,000 4.250.000 Current assets: Accounts receivable Inventory Prepaid expenses Cash and cash equivalents Total current assets Total assets 1.420,000 1,696,000 20,000 122.000 3.258.000 RM8.526.000 1,060,000 1,720,000 10,000 80.000 2.870.000 RM7.120.000 Equity and Liabilities: Equity: Common stock Retained earnings Total equity RM3,480,000 1,146,000 4.626.000 RM3,300,000 956.000 4.256.000 Non-current liabilities: Bonds payable 1,640,000 1,200,000 Current liabilities: Accounts payable Accrued liabilities Income taxes payable Total current liabilities Total liabilities Total equity and liabilities 1,940,000 130,000 190.000 2.260,000 3.900,000 RM8.526.000 1,340,000 164,000 160.000 1,664,000 2.864.000 RM7.120.000 D'Molek Textiles Bhd reported net income for 2020 as follows: D'Molek Textiles Bhd Stateinent of Comprehensive Income For The Year Ended 31 December, 2020 Revenue RM4,000,000 Cost of goods sold 2,600,000 Gross margin 1,400,000 Selling and administrative expenses 980,000 Net operating income 420,000 Non-operating items: Gain on sale of financial assets at fair value through profit or loss RM120,000 Loss on sale of equipment (40.000) 80.000 Income before taxes 500,000 Income taxes 160.000 Net income RM 340,000 4. The following additional information is available about D'Molek Textiles's activities during 2020: 1. The company declared and paid a cash dividend this year. 2. Bonds with a principal balance of RM700,000 were repaid during this year. 3. Equipment was sold during this year for RM140.000. The equipment had cost RM260,000 and had RM80,000 in accumulated depreciation on the date of sale. Non-current financial assets at fair value through profit or loss were sold during the year for RM220,000. These assets had cost RM100,000 when purchased several years ago. 5. The subsidiaries did not repay any outstanding loans during the year. 6. The company did not repurchase any of its own stock during the year. Required: a) Prepare a statement of cash flows for D'Molek Textiles Bhd for the year ended 31 December 2020 using the indirect method in accordance to MFRS 107 Statement of Cash Flows. (18.5 marks) b) Interpret the financial performance of D'Molek Textiles Bhd based on the statement of cash flows that you have prepared in part (a). (6.5 marks)