The following information is available for Crescent Bay Marine for the year ended December 31, 2025.
| Item | Amount |
|---|
| Net income | $42,000 |
| Depreciation expense | 11,000 |
| Increase in accounts receivable | 6,000 |
| Decrease in inventory | 3,500 |
| Increase in accounts payable | 4,200 |
Additional information:
- Equipment that cost $20,000 (accumulated depreciation $13,000) was sold for $9,000 cash.
- New equipment was purchased for $28,000 cash.
- Ordinary shares were issued for $10,000 cash.
- Cash dividends of $12,000 were paid.
- Cash and cash equivalents were $14,300 at January 1, 2025.
Required: Prepare a statement of cash flows for 2025 using the indirect method (IAS 7), reconciling to cash and cash equivalents at December 31, 2025. Watch the direction of the gain on disposal.