Financial Information for Fesone Inc

question 45

Essay

Financial information for Fesone Inc.'s balance sheet for fiscal 2020 and 2021 follows: Additional information:
1. Preferred shares were converted to common shares during the year at their book value.
2. The face value of the bonds is $200,000; they pay a coupon rate of 6% per annum. The effective interest rate of interest is 8% per annum.
3. Net income was $290,000.
4. There was an ordinary stock dividend valued at $12,000 and cash dividends were also paid.
5. Interest expense for the year was $130,000. Income tax expense was $116,000.
6. Fesone arranged for a $200,000 bank loan to finance the purchase of the investment at amortized cost.
7. Fesone has adopted a policy of reporting cash flows arising from the payment of interest and dividends as operating and financing activities, respectively.
8. The investment at FVPL is held for trading purposes.
Required:
a. Prepare a statement of cash flows for the year ended December 31, 2021 using the indirect method.
b. Discuss how the transaction(s)above that are not reported on the statement of cash flows are reported in the financial statements.

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Definitions:

Multidetermination

The concept that a single observed behavior or phenomenon may be caused by multiple factors.

L Data

Life record data, a type of data in psychological studies that involves real-world outcomes and behaviors observable in an individual's life.

Expectancy Effect

The influence of researchers' or subjects' expectations on the outcome of a study, potentially biasing results.

Reaction Times

The duration between the presentation of a stimulus and the initiation of a muscular response or reaction by an individual.