The financial statements of Clarion Ltd. for the 20X5 fiscal year follow (in thousands): Statement of Earnings, for the Year Ended 31 December 20X5: Sales $ 3,620 Cost of goods sold 1,200 Gross profit 2,420 Depreciation and amortization expense 1,570 Selling and administrative expenses 750 Investment revenue (240 ) Interest expense 140 Gain on sale of fixed assets (70 ) Earnings before income tax 270 Income tax expense 80 Earnings $ 190 SCI, for the Year Ended 31 December 20X5: Earnings $ 190 Plus: Increase in fair value, FVTOCI investment 310 Less: Realized gain on sale of FVTOCI investment (160 ) Comprehensive income $ 340 Statement of Changes in Equity, for the Year Ended 31 December 20X5: Common shares CC: Options Retained earnings AOCI: Investments Opening balance $ 2,700 $ 450 $ 3,900 $ 690 Comprehensive income 190 310 FVTOCI transfer on realization 160 (160 ) Cash dividends (100 ) Share issuance; patent 430 Share issuance; options 150 (125 ) Options recorded 75 Share retirement (300 ) (220 ) Closing balance $ 2,980 $ 400 $ 3,930 $ 840 Statement of Financial Position, Year Ended December 31 20X5 20X4 Assets: Cash $ 75 $ 30 FVTPL investments 310 300 FVTOCI investments 1,900 1,200 Accounts receivable (net) 2,035 1,615 Inventory 1,480 2,100 Fixed assets 9,400 8,800 Accumulated depreciation (4,250 ) (3,200 ) Patent (net) 390 Total $ 11,340 $ 10,845 Liabilities and shareholders equity: Accounts payable and accrued liabilities $ 1,350 $ 1,800 Income taxes payable 15 40 Lease liability 540 Bonds payable 1,000 1,000 Discount on bonds payable (30 ) (35 ) Deferred income tax 315 300 Common shares 2,980 2,700 Contributed capital: stock options 400 450 Retained earnings 3,930 3,900 AOCI: investments 840 690 Total $ 11,340 $ 10,845 Additional information: FVTOCI investments with an original cost of $300 were sold during the year. Their carrying value and fair value was $460. Unrealized gains were transferred to retained earnings when realized. Other FVTOCI investments with a cost of $850 were acquired during the year. All the $10 change in the FVTPL investment account relates to unrealized changes in fair value of the investments, included in investment income. Investment income also includes $230 interest and dividend revenue on all investments and thus has totalled $240. A financing lease for heavy machinery, with a present value of $600, was recorded in 20X5. Payments were made on the lease contract. The leased assets are included in fixed assets on the SFP. There is a stock option plan for executives, on which $75 of expense was recorded. Options were exercised during the year. A patent was acquired in exchange for common shares. Patent amortization expense of $40 is included in depreciation and amortization expense. Fixed assets with an original cost of $700 and a net book value of $120 were sold for $290. Assume unexplained changes in accounts are from normal transactions.

Required:

1. Prepare the statement of cash flows, using the two-step indirect method. (Assume that dividends paid are financing activities, and assume that interest paid and received, and dividends received, are operating transactions. List cash outflows as negative amounts. Enter your answers in thousands)

2. Not available in Connect.

3. Repeat the operating activities section of the SCF, using the direct method of presentation. (Assume that dividends paid are financing activities, and assume that interest paid and received, and dividends received, are operating transactions. List cash outflows as negative amounts. Enter your answers in thousands)