Response to the following questions:
1. What is the principal disadvantage of the direct method of reporting cash flows from operating activities?
2. Fully depreciated equipment costing $55,000 was discarded. What was the effect of the transaction on cash flows if (a) $5,000 cash is received, (b) no cash is received?
3. In a recent annual report, PepsiCo, Inc., reported that during the year it issued stock of $438 million for acquisitions. How would this be reported on the statement of cash flows?