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) BE22-6 Watson Corporation, which uses IFRS, is using the indirect method to prepare its 2017 statement of cash fl ows and chooses to classify dividends paid as fi nancing activities and interest paid as operating activities on the statement of cash flows. A list of items that may affect the statement follows: _____ (a) Increase in accounts receivable _____ (b) Decrease in accounts receivable _____ (c) Issue of shares _____ (d) Depreciation expense _____ (e) Sale of land at carrying amount _____ (f) Sale of land at a gain _____ (g) Payment of dividends charged to retained earnings _____ (h) Purchase of land and building _____ (i) Purchase of long-term investment in bonds, reported at amortized cost _____ (j) Increase in accounts payable _____ (k) Decrease in accounts payable _____ (l) Loan from bank by signing note payable _____ (m) Purchase of equipment by issuing a note payable _____ (n) Increase in inventory _____ (o) Issue of bonds _____ (p) Retirement of bonds _____ (q) Sale of equipment at a loss _____ (r) Purchase of corporations own shares _____ (s) Acquisition of equipment using a capital/fi nance lease _____ (t) Conversion of bonds payable into common shares _____ (u) Goodwill impairment loss _____ (v) Interest paid on self-constructed building Match each code in the list that follows to the items above to show how each item will affect Watsons 2017 statement of cash fl ows. Unless stated otherwise, assume that the transaction was for cash. Code Letter Effect A Added to net income in the operating section D Deducted from net income in the operating section R-I Cash receipt in investing section P-I Cash payment in investing section R-F Cash receipt in fi nancing section P-F Cash payment in fi nancing section N Non-cash investing and/or fi nancing activity disclosed in notes to the fi nancial statement

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