Statement Of Cashflows Part 2 Flashcards
What are the three prescribed headings for cash flows in IAS 7?
Operating Activities, Investing Activities, Financing Activities
These headings categorize the different types of cash flows reported in the Statement of Cash Flows.
What elements may need to be calculated for property, plant and equipment?
- Depreciation charge for year
- Profit/loss on disposal of property, plant and equipment
- Proceeds from disposal of property, plant and equipment
- Purchase of property, plant and equipment
These calculations depend on the information available in the financial statements.
How is the depreciation charge for the year treated in the Statement of Cash Flows?
Add back to profit before tax when calculating net cash from/used in operating activities
The depreciation charge may be found in the notes to the accounts or the Statement of Comprehensive Income.
What is the formula to calculate the carrying amount of property, plant and equipment at the end of the year?
Carrying amount at start of year + Additions - Carrying amount of disposals - Depreciation charge for year
This formula helps in determining the ending value of PP&E.
What should be included under investing activities in the Statement of Cash Flows?
Payments made to purchase property, plant and equipment
If not provided, this figure can be calculated from other information related to PP&E.
True or False: Gain on disposal of property, plant and equipment is deducted from profit before tax.
True
Conversely, a loss on disposal is added back to profit before tax.
When calculating cash flows from operating activities, what should be excluded from trade and other receivables?
Amounts that do not relate to operating activities, such as interest receivable or investment income
This ensures accurate calculation of working capital adjustments.
What adjustment must be made regarding trade and other payables when calculating net cash from operating activities?
Exclude amounts that do not relate to operating activities, such as interest payable, tax payable, or dividends payable
This is crucial for accurate working capital adjustments.
What effect do revaluations of assets have on cash flows?
No cash effect; purely a restatement of asset value
Revaluation surplus is taken to equity and does not impact profit before tax.
What should be included in the cash flows when shares are issued at a premium?
Proceeds received from share issue
It is usually easiest to combine share capital and share premium when reporting.
What happens during a bonus issue of shares?
More shares are issued without cash received
This typically involves converting retained earnings to share capital.
What is the significance of transfers between reserves in cash flow reporting?
They are purely reallocations with no cash effect
An example includes transferring from retained earnings to general reserve.
What is a key message when preparing the Statement of Cash Flows?
Ensure comfort with the PP&E table and identify any missing figures
This aids in correctly calculating cash flows.
Fill in the blank: The depreciation charge for the year may be given in the _______.
additional information
This information can help determine cash flows related to operating activities.
