Problem
|
SPENCER CORPORATION
Statement of Financial Position
|
|
|
December 31
|
|
Assets
|
|
2017
|
|
|
2016
|
|
|
Cash
|
|
$65,000
|
|
|
$29,000
|
|
|
Accounts receivable
|
|
87,000
|
|
|
59,000
|
|
|
Inventory
|
|
133,000
|
|
|
81,000
|
|
|
Investments in shares (fair value through OCI)
|
|
63,000
|
|
|
84,000
|
|
|
Land
|
|
65,000
|
|
|
103,000
|
|
|
Equipment
|
|
390,000
|
|
|
430,000
|
|
|
Accumulated depreciation-equipment
|
|
(117,000
|
)
|
|
(86,000
|
)
|
|
Goodwill
|
|
124,000
|
|
|
173,000
|
|
|
Total
|
|
$810,000
|
|
|
$873,000
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
Accounts payable
|
|
$12,000
|
|
|
$51,000
|
|
|
Dividends payable
|
|
15,000
|
|
|
32,000
|
|
|
Notes payable
|
|
220,000
|
|
|
335,000
|
|
|
Common shares
|
|
265,000
|
|
|
125,000
|
|
|
Retained earnings
|
|
288,000
|
|
|
284,000
|
|
|
Accumulated other comprehensive income
|
|
10,000
|
|
|
46,000
|
|
|
Total
|
|
$810,000
|
|
|
$873,000
|
|
Additional information:
1. Net income for the fiscal year ending December 31, 2017, was $19,000.
2. In March 2017, a plot of land was purchased for future construction of a plant site. In November 2017, a different plot of land with original cost of $86,000 was sold for proceeds of $95,000.
3. In April 2017, notes payable amounting to $140,000 were retired through issuance of common shares. In December 2017, notes payable amounting to $25,000 were issued for cash.
4. Fair value-OCI investments were purchased in July 2017 for a cost of $15,000. By December 31, 2017, the fair value of Spencer's portfolio of fair value-OCI investments decreased to $63,000. No fair value-OCI investments were sold in the year.
5. On December 31, 2017, equipment with an original cost of $40,000 and accumulated depreciation to date of $12,000 was sold for proceeds of $21,000. No equipment was purchased in the year.
6. Dividends on common shares of $32,000 and $15,000 were declared in December 2016 and December 2017, respectively. The 2016 dividend was paid in January 2017 and the 2017 dividend was paid in January 2018. Dividends paid are treated as financing activities.
Goodwill impairment loss was recorded in the year to reflect a decrease in the recoverable amount of goodwill. No goodwill was purchased or sold in the year.
1. Prepare a statement of cash flows using the indirect method for cash flows for operating activities
2. From the perspective of a shareholder, comment in general on the results reported in the statement of cash flows.