Cash Flows Flashcards
Bond premium amortization on long term debt - how is this shown in the operating activities section using the indirect method?
Deduction from net income
Bond discount amortization on long term debt - how is this shown in the operating activities section using the indirect method?
Addition to net income
Premium or Discount amortization tip
DA - DISCOUNT ADD
PD - PREMIUM DEDUCT
Cash paid for interest in bonds is reported in
Operating activities
Interest received and paid
Always operating activities
whether they are related to AVS, trading or HTM
Dividends received and paid
RECEIVED - operating
PAID - financing
Long term debt - bonds issued by entity
issuance and retirement
financing
Loans made by entity to others
disbursement and collection proceeds
Investing
interest received i operating
Acquisition and disposal of AVS
investing
Acquisition and disposal of trading securities
operating
Acquisition and disposal of PPE and intangibles
investing
Cash outflow and inflow related to Notes Receivable
investing
All borrowings and repayment of loans
Loans payable
financing
All Notes payable transactions
financing
Financing
issuance/payment on retirement of bonds issuance/reacquisition of treasury stocks issuance of shares of stocks borrowing/repayment of loan loan payable notes payable DIVIDENDS PAID
Investing
LIP - loans, investments, PPE loans granted to others - investment AVS intangibles Notes receivables
Operating
sales, purchases all interests received and paid dividends - received only trading securities income taxes
Indirect method - operating activities
Net Income Add/Deduct non cash items in IS Premium amort - deduct Discount amort - add Increase/Decrease in AR, AP, inventory, allowance for BD, interest payable, tax payable, deferred tax liabitlity, prepaid expenses
Direct method - operating activities
Cash collection from sales Cash paid for purchases cash paid for expenses cash paid/received for interest cash paid/received for taxes cash paid/received for trading securities transactions
Is cash flow per share disclosed in the Income Statement?
NO
SUPPLEMENTAL DISCLOSURES - direct method
- schedule to reconcile net income to cash flow provided/used by operations
*schedule of non cash financing and investing activities
*transactions without effect on cash:
- conversion of bonds to stock
- purchased financed entirely by loan (no actual
cash received or paid)
SUPPLEMENTAL DISCLOSURES - indirect method
- all cash payments for interest and income
taxes - schedule of non cash investing and financing
activities
IFRS cash flows
- direct or indirect method ok
- Indirect method - use modified indirect method
format differs from GAAP - all revenues and
expenses in one group then total; under
that are the changes in working capital
accounts - Bottom whould show a reconciliation of the
cash flows amount VS amounts in the
statement of financial position - interests and dividends received - are
OPERATING OR INVESTING - interest and dividends paid - are OPERATING
AND FINANCING - ok to choose but should be consistent
- income taxes paid - disclosed separately in
operating activities - cash flows from other taxes - depends in the
transaction they are related to - non cash activities - DISCLOSE IN THE NOTES
- if direct method is used -NO RECONCILIATION
at the bottom required - this is only shown
in the NOTES TO FS
In IFRS, interest and dividends received are reported in
OPERATING OR INVESTING
In IFRS, interest and dividends paid are reported in
OPERATING OR FINANCING
IFRS notes to financial statements should include:
Related to cash flows:
- Statement reconciling net income to cash flow
- Significant non cash activities for cash flows
Other disclosures:
- Information about the basis of preparation of
FS and policies used - info required by IFRS that is not presented
elsewhere in the FS - additional info not presented elsewhere but relevant to the understanding of the FS
IFRS format review page 25-15
practice
IFRS - bank overdraft cash advance
operating activities
