Question 3. The company below follows IFRS and has adopted the policy of classifying dividends paid as financing activities and interest paid as part of their operating activities. DISCOVERY COMPANY
Statement of Financial Position
As of 31 December	20X4	20X3
Assets
Accounts receivable	1,336,200	1,270,900
Inventory	1,089,700	987,700
Total current assets	2,473,900	2,300,100
Land	908,100	389,100
Plant and equipment	4,566,400	3,136,100
Less: Accumulated depreciation	(2,310,800	)	(2,277,500)
Patents	241,300	251,600
Liabilities:
Accounts payable	$	752,400	$	820,200
Salaries and wages payable	118,600	109,200
Income tax payable	277,400	257,600
Total current liabilities	1,148,400	1,187,000
Long-term debt	2,877,500	1,543,400
Total liabilities	4,025,900	2,730,400
Shareholders equity:
Common shares, no-par	474,800	466,900
Retained earnings	1,378,200	602,100

DISCOVERY COMPANY
Statement of Comprehensive Income
For the year ended 31 December 20X4
Sales revenue	9,597,600
Less expenses:
Cost of goods sold	$	5,294,200
Selling and administrative expenses	1,413,700
Depreciation and amortization	479,900
Rent expense	38,900
Miscellaneous expenses	368,300
Total expenses	7,595,000
Other revenues and expenses:
Interest expense	89,700
Gain on sale of equipment	(15,600	)
Loss on debt retirement	28,600	102,700
Earnings before income tax	1,899,900
Income tax expense	808,800
Net earnings and comprehensive income	$	1,091,100

DISCOVERY COMPANY
Statement of Comprehensive Income
For the year ended 31 December 20X4
Sales revenue	9,597,600
Less expenses:
Cost of goods sold	$	5,294,200
Selling and administrative expenses	1,413,700
Depreciation and amortization	479,900
Rent expense	38,900
Miscellaneous expenses	368,300
Total expenses	7,595,000
Other revenues and expenses:
Interest expense	89,700
Gain on sale of equipment	(15,600	)
Loss on debt retirement	28,600	102,700
Earnings before income tax	1,899,900
Income tax expense	808,800
Net earnings and comprehensive income	$	1,091,100

1. The company sold equipment that had an original cost of $757,500 and a net book value of $321,200. Other equipment was purchased for cash. Patent amortization was $10,300.
2. b. Long-term debt with a face value of $1,030,000 was repaid during the year and other long-term debt was issued at a lower interest rate.
3. c. The company issued shares for land during the period. Other common shares were retired (bought back and cancelled) at book value.

Required: 12 Marks Prepare the SCF, using the direct method