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QUESTION 3 (30 Marks] Pinto is a publicly listed company. The following financial statements of Pinto are available: Statement of financial position as at 31 August 2017 2016 $ 000 $ 000 Non-current assets Fixtures and Fittings 1,140 915 Intangible assets 750 600 Investments 75 1,890 1,590 Current assets Inventory Trade receivables Short term treasury bills Cash in hand 306 945 450 1,170 150 6 1,776 3 1,254 Total assets 3,666 2,844 Equity and Liabilities Equity Ordinary shares of $1 Share premium Revaluation reserve Retained earnings 600 480 300 780 2,160 450 450 273 540 1,713 Non-current liabilities 10% Convertible loan 510 150 Current liabilities Trade payables Interest payables Overdraft Provision for income tax 369 12 255 360 996 337 20 294 330 981 Total Equity and Liabilities 3,666 2,844 Statement of comprehensive income for the year ended 31 August 2017 Revenue $ 000 $ 000 Cost of sales 7,659 Gross profit (5,442) 2,217 Other Income: Interest Received 75 2,292 Expenses: Distribution costs 375 Administrative expenses 792 Finance costs 225 (1,392) Profit before tax 900 Income tax expense (420) Net profit 480 The following supporting information is available: (0) The non-current asset investments were disposed during the year for $90,000 (ii) The revaluation reserve relates only to the assets of fixtures and fittings. The details of the fixtures and fittings are as follows: Cost Net book value $000 $000 As at 31 Aug 17 2,160 1,140 As at 31 Aug 16 1.785 915 (iv) Fixtures and fittings which originally cost of $255,000 were sold for $96,000. At the date of the sale, the accumulated depreciation was $120,000. (v) There has been an issue of 150,000 ordinary shares at a premium of $0.20 per share issued for cash during the year. (vi) During the financial year, dividends of $240,000 on the ordinary shares were paid. (vii) Amortization charges of $45,000 for intangible assets are included in administrative expenses for the year ended 31 August 2017 (viii) The short-term treasury bills are highly liquid and are close to maturity. Required: (a) Prepare, using the indirect method, a statement of cash flows for Pinto for the year to 31 August 2017 in accordance with IAS 7 statement of cash flows. [24 Marks] (b) Comment on the financial position of Pinto as revealed by the statement of cash flows that you have prepared. [6 Marks] Page 7 of 9