During the most recent year, Grace paid $109,000 in interest to its lenders and $78,000 in dividends to its stockholders. Required: 1 . In which category of the statement of cash flows (operating, investing, or financing) should each of these amounts be
shown if Grace follows U.S. GAAP? If more than one category is acceptable, indicate what the choices are. 2 . In which category of the statement of cash flows (operating, investing, or financing) should each of these amounts be shown if Grace follows IFRS? If more than one category is acceptable, indicate what the choices are.
1 . Under U.S. GAAP, the interest paid of $109,000 must be classified as an operating activity, and the dividends paid of $78,000 must be classified as a financing activity.
2 . Under IFRS, the interest paid of $109,000 may be classified as either an operating activity or a financing activity. Dividends paid of $78,000 may be also be classified as either an operating activity or a financing activity.
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