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Question A2 The statement of financial position of Saunders Trading Ltd on 31st March 2018 (with comparatives for 2017), and comprehensive income, are as follows: Statement of financial position as at 31 March 2018 2018 2017 000 000 Assets Non-current assets PPE 976 940 Investments 500 500 1,476 1,440 Current assets Inventories Trade receivables Cash at bank 462 424 280 314 30 772 738 2,248 2,178 Equity Share capital Share premium account Retained earnings 440 400 140 120 1,052 890 1,632 1,410 Liabilities Non-current liabilities Long term loans 180 260 Current liabilities Trade payables Accrued interest payable Taxation Bank overdraft 364 352 6 110 436 46 508 2,248 2,178 Continued on noxt nogs 66 Statement of comprehensive income for the year to 31 March 2018 000 1,504 (774) 730 Sales Cost of sales Gross profit Administrative and selling expenses Interest (450) (36) Dividends received Profit before tax Taxation Profit after tax 44 288 (66) 222 The following information is also available: 1. There were no non-current asset disposals during the year to 31 March 2018. 2. A dividend of 60,000 was paid in June 2017 3. Employee salaries of 296,000 and equipment depreciation of 140,000 are included in the administrative and selling expenses. REQUIRED a) Prepare a statement of cash flows for Saunders Trading Ltd for the year ended 31 March 2018 in accordance with the requirements of IAS7 Statement of Cash Flows using either the direct method OR the indirect method. Show all your workings. (15marks) b) Discuss the advantages of the Statement of Cash Flow over the accruals-based Income Statement and Statement of Financial Position. (10 marks) (Total 25 marks) Question A3 Discuss the treatment of research and development costs as prescribed under IAS 38. (Total 20 marks) Section Total: 75 marks