Tub Time Corp

question 56

Essay

Tub Time Corp.'s policy is to report all cash flows arising from interest and dividends in the operating activities section. Tub Time's activities for the year ended December 31, 2021 included the following:
• 2021's net income after taxes totaled $220,000.
• Declared and issued a stock dividend valued at $40,000.
• Accounts receivable decreased $44,000 in 2021.
• Sold a investment at FVPL for $13,000. The book value was $11,000. (Assume this investment at FVPL was held for trading purposes.)
• Interest revenue for the period was $6,000. The interest receivable account decreased $4,000.
• Declared a $10,000 dividend payable. The dividends payable account decreased $19,000 in 2021.
• Sold an investment at FVOCI for $9,000. The original cost of the investment was $14,000.
• Tub Time recorded a $15,000 goodwill impairment loss during the year.
• Depreciation expense for the year was $14,000.
Required:
a. Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.
b. Identify how the activities listed above that are not operating activities would be required in the statement of cash flows.

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Definitions:

Long-Term Losses

Financial losses on investments held for more than a year before being sold at a lower price than the purchase cost.

Donor's Adjusted Basis

The original value of an asset for tax purposes, adjusted for factors such as depreciation or improvements, used to determine gain or loss on a gift's transfer.

Donee

The recipient of a gift or donation, often referenced in the context of tax deductions for charitable contributions.

Amount Realized

The total sum received from a sale or transaction after accounting for all expenses and liabilities.