22.8: Presentation Flashcards
What are the key disclosure requirements for the statement of cash flows under IFRS and ASPE?
IFRS:
Separately disclose interest received, interest paid, and dividends as operating, investing, or financing activities.
Disclose cash flows from income taxes separately.
Provide relevant details on significant non-cash transactions.
Disclose policies for cash equivalents and reconcile the changes in cash balances.
Report restricted cash amounts.
ASPE:
Same requirements as IFRS, except:
Cash flows from income taxes are not required to be disclosed separately.
How does IFRS recommend presenting operating cash flows?
IFRS allows for either the direct or indirect method.
It is common to begin with income before interest and taxes (EBIT), and then adjust for non-cash items and changes in working capital to reconcile to net cash from operating activities.
What is typically encouraged in IFRS disclosures regarding cash flows?
Information on:
Additional cash available under borrowing agreements.
Cash flows for maintaining or increasing operating capacity.
The operating, investing, and financing cash flows of each reportable segment.
Non-cash changes in financing activities (e.g., debt settlements or exchange rate adjustments).
What is a significant advantage of using the direct method for cash flow presentation?
The direct method provides a more detailed and clear presentation of actual cash inflows and outflows, making it easier for users to assess how cash is generated and used in operations.
However, it is more complex to prepare compared to the indirect method.
How are significant non-cash transactions reported in the statement of cash flows?
These transactions are not included in the cash flow statement but must be disclosed in the notes to the financial statements, under both IFRS and ASPE.
Examples include exchanges of assets, debt conversions, or equity-based payments.
What are some common adjustments in the indirect method when preparing the operating cash flows?
Adjust for non-cash items like depreciation, amortization, and impairment losses.
Adjust for changes in working capital, including increases or decreases in accounts receivable, inventories, and accounts payable.
Adjust for gains or losses on the disposal of assets.
What does the reconciliation of liabilities arising from financing activities entail?
This involves providing details on changes in financing liabilities, such as proceeds from or repayment of loans, adjustments for foreign exchange rates, and non-cash items like dividends declared but not yet paid.
What differences exist between ASPE and IFRS in terms of interest and dividends in the statement of cash flows?
IFRS: Companies can classify interest paid, interest received, and dividends as operating, investing, or financing activities based on their policy.
ASPE: Requires dividends and interest paid to be classified as financing activities.
