Professional Documents
Culture Documents
IAS 7
IAS 7 - Overview
Objective
and scope
Cash flows
Reporting operating cash flows
Reporting investing cash flows
Reporting financing cash flows
Specific items
Disclosures
2
X
X
X
X
(X)/X
(X)/X
X / (X)
$000
(X)
(X)
X/(X)
(X)
X
X
X/(X)
X
(X)
X/(X)
X/(X)
X
X
Depreciation
Interest expense
Increase in trade
receivables
Decrease in
inventories
Decrease in trade
payables
Interest paid
Dividends paid
14
method
15
methodsame entity?
16
Examples:
18
19
21
22
IAS 7 - Disclosures
Operating,
24
End-of-Chapter Practice
25
End-of-Chapter Practice
26
End-of-Chapter Practice
3-3 Companies are affected by a number of events and transactions, some of which have an effect on their cash and
cash equivalents, and some which do not. Following are some examples of such events and transactions:
1.Annual payment of $100 on a finance lease obligation, $2 of which is interest
2.Acquisition of a 4100, 3%, 90-day government treasury bill
3.Payment of $25 to a pension fund trustee
4.Cash received on the maturity of the treasury bill in item 2 above
5.Annual payment of $100 on an operating lease for sales office space
6.Receipt of $10 on the sublease of excess sales office space
7.Acquisition of the companys treasury shares at a cost of $75
8.Conversion of convertible debt into common shares
9.Payment of $30 of a portion of long-term debt reported in current liabilities along with $3 of interest
10.Costs incurred to repair a customers product under warrantyinventory supplies used $1; labor paid $4
Instructions
For each item listed above
(a)identify the effect on the companys cash and cash equivalents; and
(b)indicate how the transaction or event will be reported on the companys statement of cash flows, if at all, and if
any special disclosures are required.
27
End-of-Chapter Practice
28
As of
January 1,
2011
Cash
$ 555,000
$ 674,480
Accounts
receivable
157,800
149,000
Inventory
254,600
269,000
Prepaid
expenses
59,000
62,000
Equipment
875,000
875,000
(120,000)
(175,000)
Accumulated
depreciati
on
Land
Total assets
As of
January 1,
2011
As of
December
31, 2011
500,000
450,000
$2,281,400
$2,304,480
Accounts
payable
Accrued
liabilities
95,000
As of
December 31,
2011
$
87,500
45,000
49,800
1,200,000
1,050,000
Common
stock
400,000
400,000
Retained
earnings
541,400
717,180
$2,281,400
$2,304,480
Notes payable
Total liabilities
and equity
$1,300,500
5,000
4,500
(750,500)
(125,500)
(55,000)
(49,800)
(5,000)
The following account balances are all zero at both the beginning and end of the year:
interest payable, interest receivable, dividends payable, dividends receivable and income
taxes payable.
BDI does not include any interest or dividend cash flows in the operating section of the
statement of cash flows when it prepares its statement under IFRS.
BDI uses the indirect method for the operating section for both US GAAP and IFRS.
As of December 31, 2011, BDI has one bank account balance that is overdrawn. The
overdraft amount is $12,000. BDI has not yet moved this from its cash account into the
liabilities section of its balance sheet. Overdrafts are an integral part of BDIs cash
management.
BDI paid income taxes of $7,000 that were attributable to financing activities. It paid
income taxes of $2,000, all attributable to investing activities.
BDI sold land this year with a cost basis of $50,000. It reported a $5,000 loss on the
sale.
$195,780
$55,000
5,000
8,800
(14,400)
(3,000)
$45,000
$ 45,000
Financing activities
Borrowings loan repayments
Borrowings bank overdraft
Payment of dividends
Net cash used in financing activities
(150,000)
12,000
(20,000)
(158,000)
Net
in cash
*Note
thatincrease
the cash balance
at December 31, 2011, must exclude bank overdrafts
of $12,000.
131,480
Cash at January 1, 2011
555,000
BDI
Statement of cash flows
For the year ended December 31, 2011
Operating activities
$195,78
0
Net income
Adjustments to reconcile net income to net cash provided by
operating activities:
Interest revenue
Dividend revenue
Depreciation expense
Loss on sale of land
Interest expense
Income taxes paid due to investing and financing activities
Decrease in accounts receivable
$(5,000)
(4,500)
55,000
5,000
23,000
9,000
8,800
Investing activities
Sale of land
$45,000
Receipt of interest
5,000
Receipt of dividends
Income taxes paid due to investing
activities
4,500
(2,000)
$ 52,500
Financing activities
Borrowings loan repayment
(150,000)
Payment of interest
(23,000)
Payment of dividends
(20,000)
(7,000)