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Exercises Lesson - 7 - 0809 - Solucionados PDF
Exercises Lesson - 7 - 0809 - Solucionados PDF
FINANCIAL ACCOUNTING
2008-2009
EXERCISES LESSON 7
CASH FLOW STATEMENT
1
CASH FLOW STATEMENT: LESSON 7
EXERCISE 1 LESSON 7
Company ABC, created at the beginning of 2007, had at the beginning of 2008 a working capital
composed exclusively by cash. The cash account had a balance of 4.000 €. During 2008 the
operations of the company have been the following:
• The services rendered during the year amount 600 € received in cash. Personnel expenses
and other operating expenses of 400 € have been paid in cash during the year.
• The fixed assets depreciation expense for the year amounts 110 €.
• The 1st of October the company obtained a long-term loan of 4.000 € from the CHASE
MANHATTAN BANK, which will be paid back at the end of 2012. The annual interest rate
is 3% on the total amount, payable at the beginning of each quarter.
• At the end of the year the company has bought new fixed assets with a cost of 12.000 €:
8.000 paid in cash and the other 4.000 € will be paid in 24 months.
• The tax rate is 30%.
EXERCISE 2 LESSON 7
Company ABC, created at the beginning of 2007, published the following financial statements at the end
of 2008:
III. Trade accounts receivables and other r. VII. Income for the year. 42 0
1. Trade accounts receivables for sale and services. 348 0 B) NON-CURRENT LIABILITIES
VII. Cash and cash equivalents. 2. Long-term debt payable to credit institutions. 4,000 0
2
2008
A) CONTINUING OPERATIONS
1. Net turnover. 600
6. Personnel expenses. (400)
8. Fixed assets depreciation expense. (110)
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 90
13. Financial expenses. (30)
A.2) FINANCIAL INCOME (12+13+14+15+16) (30)
A.3) INCOME BEFORE TAXES (A.1+A.2) 60
17. Income tax. (18)
A.4) INCOME FROM CONTINUING OPERATIONS (A.3+17) 42
A.5) INCOME FOR THE YEAR 42
During 2008 the operations of the company have been the following:
• The services rendered during the year amount 600 € (50% of these revenues have been collected in
cash during 2008). Personnel expenses were 400 € (75% of these expenses have been paid in cash
during 2008).
• The fixed assets depreciation expense for the year amounts 110 €.
• The 1st of October the company obtained a long-term loan of 4.000 € from the CHASE
MANHATTAN BANK, which will be paid back at the end of 2012. The annual interest rate is 3% on
the total amount, payable at the end of each semester.
• At the end of the year the company has bought new fixed assets with a cost of 12.000 €: 8.000 and the
V.A.T. paid in cash and the other 4.000 € will be paid in 24 months.
• The tax rate is 30%, payable in June of the next year.
• V.A.T. is 16%.
SOLUTION
JOURNAL 2008
3
(Income tax)
60 Income before taxes to Income tax expense 18
INCOME FOR THE YEAR 42
96 V.A.T. collected to V.A.T. paid 1920
1824 Receivable from public authorities
(V.A.T.)
4
c) Tangible fixed assets.
d) Investment property.
e) Other financial assets.
f) Non-current assets held for sale.
g) Other assets.
8. Cash flows from investment activities (7-6) -8000
C) CASH FLOWS FROM FINANCING ACTIVITIES
9. Cash receipts and payments for equity instruments
a) Issuing of equity instruments (+).
b) Amortization of equity instruments (-).
c) Acquisition of the own equity instruments (-).
d) Disposal of the own equity instruments (+).
e) Grants, donations and legacies received (+).
10. Cash receipts and payments for debt instruments
a) Issuing of
1. Debentures and other negotiable securities (+).
2. Long term debt payable to credit institutions (+). 4000
3. Long term debt payable to subsidiaries and associated companies (+).
4. Other debt (+).
b) Refunds and amortization of
1. Debentures and other negotiable securities (-).
2. Long term debt payable to credit institutions (-).
3. Long term debt payable to subsidiaries and associated companies (-).
4. Other debt (-).
11. Cash payments of dividends and remuneration of other equity instruments.
a) Dividends (-).
b) Remuneration of other equity instruments (-).
12. Cash flows from financing activities (+/-9+/-10-11) 4000
D) Effect of changes in exchange rates
E) NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS -5872
Cash and equivalents at the beginning of the period 4000
Cash and equivalents at the end of the period -1872
EXERCISE 3 LESSON 7
Classify the following operations by type of activity according to the model of the Cash Flow
Statement established in the P.G.C. Indicate also the amount of the cash collection or payment.
5
Cash payment to the City Council for the local taxes:
500
Cash payment of the wages to the employees: 40,000
Cash payment the Tax Agency for the IRPF
withholdings to the employees: 4,200
Cash payment for the acquisition of an investment in
shares that are classified as held for trading: 3,000
Purchase of a machinery by 20,000. 30% of this
amount paid in 18 months time.
Cash payment to the Tax Agency for the income tax
of the previous year: 38,000
Increase in the fair value of the held for trading
portfolio: 1,100
Sale in cash by 26,000 of a land that had a book
value of 12,000
Cash payment of the rent of a building for November
and December of this year and January of next year:
570
Cash collection of a subvention from the City
Council to compensate operating losses: 40,000
Cash collection of a grant, obtained at the end of the
previous year, to finance the purchase of a new
machinery: 87,000
Transfer to income for the year of a portion of a
capital grant: 8,700
Cash payment of a fine of 45,200 for environmental
damage. The company had registered a long-term
provision of 46,000.
Increase in capital stock of 20,000 with a share
premium of 1,000. Uncalled subscribed capital
receivable is 10,000.
Income for the year is 15,000 and 10,000 are
distributed to dividends. The previous year the
company had paid 1,000 as dividends paid in
advance.
6
SOLUTION
7
EXERCISE 4 LESSON 7
Company ABC, Ltd. has disclosed the following financial statements at the end of year 2009.
2009
A) CONTINUING OPERATIONS
1. Net turnover. 30,176
a) Sales. 30,176
4. Procurements. (20,700)
a) Consumption of goods for sale. (20,700)
7. Other operating expenses. (7,670)
a) Outside services. (7,620)
c) Losses, impairment and change in provisions for trade operations. (50)
8. Fixed assets depreciation expense. (1,200)
11. Impairment and income from disposal of non-current assets. 50
b) Income from disposals and others. 50
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 656
12. Financial revenues. 50
b) From marketable securities and other financial instruments. 50
A.2) FINANCIAL INCOME (12+13+14+15+16) 50
A.3) INCOME BEFORE TAXES (A.1+A.2) 706
17. Income tax. (200)
A.4) INCOME FROM CONTINUING OPERATIONS (A.3+17) 506
A.5) INCOME FOR THE YEAR (A.4+18) 506
COMPLEMENTARY INFORMATION:
1.- During 2009 the company made the distribution of 2008 net income. A portion of this income was
distributed as reserves and another was paid as dividends in 2009. Moreover, the company made a
payment of interim dividends at the beginning of June.
2.- A machinery was sold during 2009 for 100 m.u. Its adquisition price was 250 m.u. and the
accumulated depreciation was 200 m.u. A new machinery has also been bought with a cost of 700 m.u.
8
SOLUTION
9
EXERCISE 5 LESSON 7
Company XYZ, Ltd. has published the following financial statements in year 2009:
2009
A) CONTINUING OPERATIONS
1. Net turnover. 20,150
a) Sales. 20,150
4. Procurements. -11,850
a) Consumption of goods for sale. - 11,850
6. Personnel expenses. - 1,800
a) Wages, salaries and similar expenses. - 1,800
7. Other operating expenses. - 800
a) Outside services. - 800
8. Fixed assets depreciation expense. - 2,100
9. Transfer of grants of non-financial non-current assets and others. 100
11. Impairment and income from disposal of non-current assets. - 250
b) Income from disposals and others. - 250
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 3,450
12. Financial revenues. 50
a) From holdings in equity instruments. 50
13. Financial expenses. - 100
b) Of third parties. - 100
16. Impairment and income from disposal of financial instruments. - 400
a) Impairment and losses. - 400
A.2) FINANCIAL INCOME (12+13+14+15+16) -450
A.3) INCOME BEFORE TAXES (A.1+A.2) 3,000
17. Income tax. - 1,050
A.4) INCOME FROM CONTINUING OPERATIONS (A.3+17) 1,950
A.5) INCOME FOR THE YEAR (A.4+18) 1,950
Additional information:
− The 15th of June of 2009 the company made the distribution of the income of the previous year, half
of it was taken to reserves and the other half was paid as dividends.
− The 1st of October of 2009 a vehicle was sold in cash for 600 m.u. This vehicle had been bought the
1st of January of 2004 for 2,000 m.u. and has been depreciated by a 10% each year.
− The 30th of September of 2009 a new vehicle was bought with a cost of 3,000 m.u. To finance the
purchase, that same day the company obtained a loan form a financial institution for the same
amount, which will be given back in 5 years at equal amounts. The annual interest is 10% on the
outstanding amount and will be paid at the end of each year.
− The 12th of February of 2009 the company paid the final portion of a long-term loan received in a
previous year.
10
SOLUTION
11
EXERCISE 6 LESSON 7
Company ARTEL, Ltd, has available the following information at the end of X1:
B) CURRENT ASSETS
II. Inventory 820 615
1. Comercial 770 615
6. Advances to suppliers 50 ---
III. Trade accounts receivables and other receivables 260 310
1. Trade accounts receivables for sale and services 260 280
3. Sundry accounts receivables --- 30
V. Short-term financial investments 25 15
1. Holdings in equity 25 15
VI. Accrual accounts 20 ----
VII. Cash and cash equivalents 40 20
1. Cash 40 20
TOTAL ASSETS 1,795 1,660
31/12/X1 31/12/X0
A) EQUITY
A-1) Equity
I. Capital 805 675
1. Registered capital 805 675
III. Reserves 370 395
1. Legal and statutory 370 395
VII. Income for the year 98 52
VIII. (Dividends paid in advance) (50) ---
B) NON-CURRENT LIABILITIES
II. Long term debt 89 ---
2. Long term debt payable to credit institutions 89 ---
C) CURRENT LIABILITIES
III. Short term debt 110 160
2. Short term debt payable to credit institutions --- 160
5. Other financial liabilities 110 ---
V. Trade accounts payable and other payables 373 328
1. Trade accounts payable for purchases and services 270 256
3. Sundry accounts payable 35 60
5. Liability for current tax 18 12
6. Other payables to public authorities 50 ---
VI. Accrual accounts ---- 50
TOTAL LIABILITIES 1,795 1,660
The list of expenses and revenues that compose the income of year X1 are the following:
12
Amount
Sales revenue 4,800
Other operating revenue 70
Profits from held for trading portfolio 10
Consumption of goods for sale 3,120
Personnel expenses 1,222
Depreciation of tangible fixed assets 30
External services 33
Financial expenses 103
Losses from the sale of tangible fixed assets 150
Reversion of impairment of tangible fixed assets 10
Sale discounts for early payments 100
Income tax expense 34
Income for the year 98
Additional information:
1.- The distribution of income of year X0 is the following: 40 m.u. are distributed to reserves and
12 m.u. were paid as dividends.
Moreover, in X1 the company has paid a dividend in advance of the income of that year, as it can
be seen from the balance sheet.
2.- A building has been sold in cash. The acquisition price had been 270 m.u. and the
accumulated depreciation in the moment of the sale was 60 m.u.
At the end of the year a new building was bought with a cost of 160 m.u. (50 m.u. were paid in
cash and the remaining will be paid at the end of next year).
These are the only transactions with the tangible fixed assets.
3.- At the end of X1 the company has obtained a long-term loan of 92 m.u. from a financial
institution. The opening fees were 3.2 %.
4.- The company has issued capital stock. Half of the amount has been paid by the shareholders
and the other half has been transferred from reserves.
5.- Accrual accounts in the current assets are interest paid in advance that correspond to the debt
with financial institutions. Accrual accounts in the current liabilities are revenues received in
advance.
6.- The profits from the held from trading portfolio were registered at the end of the year for the
valuation at fair value of that portfolio.
13
SOLUTION
14
EXERCISE 7 LESSON 7
15
31/12/X1 31/12/X0
A) EQUITY
A-1) Shareholders’ equity.
I. Capital. 10.250.000 10.000.000
1. Registered capital. 11.000.000 10.000.000
2. (Uncalled subscribed capital). (750.000) -
II. Additional paid-in capital. 250.000 -
III. Reserves. 2.000.000 1.200.000
1. Legal and statutory. 2.000.000 1.200.000
VII. Income for the year. 2.310.000 1.500.000
A-2) Adjustments for changes in value
I. Financial instruments available for sale. 28.000 -
A-3) Grants, donations and legacies received. 612.500 -
B) NON-CURRENT LIABILITIES
I. Long-term provisions. 250.000
4. Other provisions. 250.000 -
II. Long-term debt. 900.000
3. Long-term debt from leasing contracts. 900.000 -
IV. Deferred tax liability 274.500 -
C) CURRENT LIABILITIES
III. Short-term debt. 1.100.000 3.000.000
2. Short-term debt payable to credit institutions. 1.000.000 3.000.000
3. Short-term debt from leasing contracts. 100.000 -
V. Trade accounts payables and other payables. 2.162.000 1.720.000
1. Trade accounts payables for sale and services. 1.175.000 1.000.000
3. Sundry accounts payables. 87.000 95.000
5. Liability for current tax. 500.000 325.000
6. Other payables to public authorities. 400.000 300.000
TOTAL LIABILITIES 20.137.000 17.420.000
ADDITIONAL INFORMATION:
1. Accrual accounts refer to interest paid in advance for the interest expenses of a short-term debt with
credit institutions.
2. Distribution of income of X0 has been the following: Legal reserve 800,000; Dividends 700,000.
3. The company issued new capital stock: 1,000 shares were issued at a nominal value of 1,000 m.u. and
an issuing value of 1,250 m.u.
4. The capital grant was obtained at the beginning of X1.
5. At the beginning of the year a long-term provision was registered to account for the risk of paying a
possible compensation to an employee for an accident in the workplace.
6. In June of X1 the company sold in cash the holdings in equity that had as a short-term investment and
that were considered as held for trading. These shares were acquired in X0 for a price of 190,000 m.u. and
their value was increased at the end of year X0 because of an increase in its fair value.
7. Land and structures has the following breakdown:
31/12/X1 31/12/X0
Land 5.000.000 4.000.000
Structures 12.000.000 10.000.000
Accumulated depreciation of structures (1.750.000) (1.500.000)
The debt from leasing contracts corresponds to the acquisition of a new building with a cost of
1,000,000 m.u.
16
SOLUTION
17
g) Other assets.
8. Cash flows from investment activities (7-6) - 1.800.000
C) CASH FLOWS FROM FINANCING ACTIVITIES
9. Cash receipts and payments for equity instruments
a) Issuing of equity instruments (+). 500.000
b) Amortization of equity instruments (-).
c) Acquisition of the own equity instruments (-).
d) Disposal of the own equity instruments (+).
e) Grants, donations and legacies received (+). 1.000.000
10. Cash receipts and payments for debt instruments
a) Issuing of
1. Debentures and other negotiable securities (+).
2. Long term debt payable to credit institutions (+).
3. Long term debt payable to subsidiaries and associated
companies (+).
4. Other debt (+).
b) Refunds and amortization of
1. Debentures and other negotiable securities (-).
2. Long term debt payable to credit institutions (-).
3. Long term debt payable to subsidiaries and associated
companies (-).
4. Other debt (-). - 2.000.000
11. Cash payments of dividends and remuneration of other equity
instruments.
a) Dividends (-). - 700.000
b) Remuneration of other equity instruments (-).
12. Cash flows from financing activities (+/-9+/-10-11) - 1.200.000
D) Effect of changes in exchange rates
E) NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 560.000
Cash and equivalents at the beginning of the period 150.000
Cash and equivalents at the end of the period 710.000
18
EXERCISE 8 LESSON 7 – From exam of course 0708
Company XYZ, Ltd. has prepared the following financial Statements at the end of 2009:
19
2009
A) CONTINUING OPERATIONS
1. Net turnover. 20.000.000
a) Sales. 20.000.000
4. Procurements. - 11.850.000
a) Consumption of goods for sale. - 12.000.000
d) Impairment of goods for sale, raw materials and other consumables. 150.000
5. Other operating revenues. 1.000.000
a) Accesory and other ordinary income. 1.000.000
6. Personnel expenses. - 3.000.000
a) Wages, salaries and similar expenses. - 3.000.000
7. Other operating expenses. - 3.200.000
a) Outside services. - 3.200.000
8. Fixed assets depreciation expense. - 700.000
9. Transfer of grants of non-financial non-current assets and others. 100.000
11. Impairment and income from disposal of non-current assets. -
a) Impairment and losses (reversion of impairment) 300.000
b) Income from disposals and others. - 300.000
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 2.350.000
12. Financial revenues. 50.000
b) From marketable securities and other financial instruments. 50.000
b 2) Of third parties. 50.000
13. Financial expenses. - 500.000
b) Of third parties. - 500.000
14. Change in fair value of financial instruments. 50.000
a) Held for trading and others. 50.000
A.2) FINANCIAL INCOME (12+13+14+15+16) - 400.000
A.3) INCOME BEFORE TAXES (A.1+A.2) 1.950.000
17. Income tax. - 500.000
A.4) INCOME FROM CONTINUING OPERATIONS (A.3+17) 1.450.000
1. The profits from the held from trading portfolio were registered at the end of the year for the
valuation at fair value of that portfolio.
2. The losses of year 2008 have been compensated against reserves. Moreover, in 2009 the company has
paid a dividend in advance of the income of that year, as it can be seen from the balance sheet.
3. Accrual accounts in the current assets are expenses paid in advance.
4. A new grant has been received at the end of 2009 for the acquisition of new machinery. The company
has also registered the transfer to income of the corresponding portion of a previous grant.
5. The breakdown of the short-term debt with credit institutions is the following:
31/12/2009 31/12/2008
Short-term debt with credit 2,000,000 2,000,000
institution
Interest payable 150,000 70,000
REQUIRED: Prepare the Cash Flow Statement of year 2009 (only cash flows from operations and cash
flows from financing activities).
20
SOLUTION
21
EXERCISE 9 LESSON 7 – From exam of course 0708
Company XYZ, Ltd. has prepared the following financial Statements at the end of 2009:
1. Commercial (goods for sale). 1.400 900 B) NON-CURRENT LIABILITIES 2.107,5 2.965
III. Trade accounts receivables and other
receivables.
440 500 I. Long-term provisions. 500 500
1. Trade accounts receivables for sale and services. 100 200 2. Environmental actions. 500 500
3. Sundry accounts receivables. 300 250 II. Long-term debt. 1.000 2.000
4. Employee receivables. 40 50 2. Long-term debt payable to credit institutions. 1.000 2.000
V. Short-term financial investments. 60 1.050 IV. Deferred tax liability 607,5 465
1. Holdings in equity. 600 500 C) CURRENT LIABILITIES 2.520 2.600
2. Loans to companies. 550 III. Short-term debt. 2.010 2.010
VI. Accrual accounts. 10 20 2. Short-term debt payable to credit institutions. 2.010 2.010
VII. Cash and cash equivalents. 772 1.555 V. Trade accounts payables and other. 510 590
TOTAL ASSETS 30.272 25.075 1. Trade accounts payables for purchases & s. 80 50
3. Sundry accounts payable. 50 20
5. Liability for current tax. 300 200
6. Other payables to public authorities. 80 220
7. Customer advances. - 100
TOTAL LIABILITIES 30.272 25.075
22
2009
A) CONTINUING OPERATIONS
1. Net turnover. 4.500
a) Sales. 4.500
4. Procurements. - 1.150
a) Consumption of goods for sale. - 1.250
d) Impairment of goods for sale, raw materials and other consumables. 100
5. Other operating revenues. 350
a) Accesory and other ordinary income. 200
b) Operating subventions included in income for the year. 150
6. Personnel expenses. - 650
a) Wages, salaries and similar expenses. - 500
b) Employee welfare expenses. - 150
7. Other operating expenses. - 450
a) Outside services. - 450
8. Fixed assets depreciation expense. - 2.100
9. Transfer of grants of non-financial non-current assets and others. 500
11. Impairment and income from disposal of non-current assets. 350
a) Impairment and losses - 50
b) Income from disposals and others. 400
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 1.350
12. Financial revenues. 75
a) From holdings in equity instruments. 50
a2) Of third parties. 50
b) From marketable securities and other financial instruments. 25
b 2) Of third parties. 25
13. Financial expenses. - 111
b) Of third parties. - 111
14. Change in fair value of financial instruments. 175
b) Transfer to income for the year for available for sale financial instruments. 175
A.2) FINANCIAL INCOME (12+13+14+15+16) 139
A.3) INCOME BEFORE TAXES (A.1+A.2) 1.489
17. Income tax. - 462
A.4) INCOME FROM CONTINUING OPERATIONS (A.3+17) 1.027
A.5) INCOME FOR THE YEAR (A.4+18) 1.027
1. Short-term holdings in equity are a portfolio of stocks classified as “held for trading”. There has been
no profit or loss due to a change in the fair value of these stocks.
2. Long-term holdings in equity are a portfolio of stocks classified as “available for sale”. The portfolio
includes 100 shares acquired in October of 2008 for a price of 24,5 m.u. per share. The fair value at
the end of 2008 was 25 m.u.
In June of 2009 half of the portfolio has been sold for a price of 28 m.u. per share.
The fair value at the end of 2009 is 29 m.u.
3. The distribution of income of year 2008 is the following: 400 m.u. are distributed to reserves and 525
m.u. were paid as dividends.
4. The uncalled subscribed capital has been called and the company has collected in cash the
outstanding amount from the shareholders during 2009.
5. A new capital subvention has been received at the end of the year.
6. Accrual accounts in the current assets are interest paid in advance that correspond to the debt with
financial institutions.
23
7. During 2009, machinery that had a cost of 4,000 m.u. has been sold. The accumulated depreciation
was 800 m.u. and the profit obtained in the sale was 400 m.u. This was the only sale of tangible fixed
assets.
8. There have been several acquisitions of tangible fixed assets. The breakdown of the fixed assets
depreciation expense is the following:
2009
Depreciation expense of intangible assets 50
Depreciation expense of structures 500
Depreciation expense of plant and machinery 1,500
Depreciation expense of investment property 50
Total fixed assets depreciation expense 2,100
SOLUTION
During 2009, machinery that had a cost of 4,000 m.u. has been sold. The accumulated depreciation
was 800 m.u. and the profit obtained in the sale was 400 m.u. This was the only sale of tangible
fixed assets.
Sale of machinery
BV= 4000-800=3200 Selling price= 3200+400 = 3600
Short-term holdings in equity are a portfolio of stocks classified as “held for trading”. There has
been no profit or loss due to a change in the fair value of these stocks.
Long-term holdings in equity are a portfolio of stocks classified as “available for sale”. The
portfolio includes 100 shares acquired in October of 2008 for a price of 24,5 m.u. per share. The
fair value at the end of 2008 was 25 m.u.
In June of 2009 half of the portfolio has been sold for a price of 28 m.u. per share.
The fair value at the end of 2009 is 29 m.u.
1.450 Final
balance
24
2009 transactions:
Sale of 50 shares:
Nº Debit Credit
572 Cash 1.400
250 Long term holdings in equity 1.400
Nº Debit Credit
802 Transfers of profits from available for sale financial 175
assets
7632 Profits from available for sale portfolio 175
Nº Debit Credit
8301 Deferred tax 52,5
1330 Adjustments for changes in value of financial instruments 122,5
available for sale
802 Transfers of profits from available for sale financial 175
assets
Nº Debit Credit
900 Profits from available for sale financial assets 200
25
8301 Deferred tax 60
1330 Adjustments for changes in value of financial instruments 140
available for sale
A new capital subvention has been received at the end of the year.
Nº Debit Credit
4708 Receivable from public authorities 800
940 Revenues of official capital grants 800
Nº Debit Credit
572 Cash 800
4708 Receivable from public authorities 800
Nº Debit Credit
840 Transfer of official capital grants 500
Capital grants, donations, and legacies transferred to
746 500
income for the year
Nº Debit Credit
940 Revenues of oficial capital grants 800
8301 Deferred tax 240
130 Grants, donations and legacies 560
26
Nº Debit Credit
8301 Deferred tax 150
130 Grants, donations and legacies 350
840 Transfer of official capital grants 500
2009
Depreciation expense of intangible assets 50
Depreciation expense of structures 500
Depreciation expense of plant and machinery 1,500
Depreciation expense of investment property 50
Total fixed assets depreciation expense 2,100
27
A) CASH FLOWS FROM OPERATING ACTIVITIES 200X
1. Income before taxes 1.489
2. Adjustments to income 1.111
a) Depreciation of fixed assets (+). 2.100
b) Value corrections for impairment (+/-). 50
d) Transfer of grants (-). - 500
e) Income from disposal of non-current assets (+/-). - 400
f) Income from disposal of financial instruments (+/-). - 150
g) Financial revenues (-). - 75
h) Financial expenses (+). 111
j) Change in fair value of financial instruments (+/-). - 25
3. Changes in working capital - 620
a) Inventory (+/-). - 500
b) Accounts receivables and other receivables (+/-). 60
d) Accounts payables and other payables (+/-). - 180
4. Other cash flows from operating activities - 388
a) Cash payments of interests (-). - 101
b) Cash receipts of dividends (+). 50
c) Cash receipts of interests (+). 25
d) Cash receipts (payments) for income taxes (+/-). - 362
5. Cash flows from operating activities (+/-1+/-2+/-3+/-4) 1.592
B) CASH FLOWS FROM INVESTMENT ACTIVITIES
6. Cash payments for investments (-) - 12.500
c) Tangible fixed assets. - 12.400
e) Other financial assets. - 100
7. Cash receipts from disinvestments (+) 5.550
c) Tangible fixed assets. 3.600
e) Other financial assets. 1.950
8. Cash flows from investment activities (7-6) - 6.950
C) CASH FLOWS FROM FINANCING ACTIVITIES
9. Cash receipts and payments for equity instruments 6.100
a) Issuing of equity instruments (+). 5.300
e) Grants, donations and legacies received (+). 800
10. Cash receipts and payments for debt instruments - 1.000
a) Issuing of
2. Long term debt payable to credit institutions (+). - 1.000
11. Cash payments of dividends and remuneration of other equity instruments. - 525
a) Dividends (-). - 525
12. Cash flows from financing activities (+/-9+/-10-11) 4.575
E) NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS - 783
Cash and equivalents at the beginning of the period 1.555
Cash and equivalents at the end of the period 772
28
EXERCISE 10 LESSON 7 – From exam of course 0708
Company XYZ, Ltd. has prepared the following financial Statements at the end of 2009:
2009
A) CONTINUING OPERATIONS
1. Net turnover. 55.000
a) Sales. 55.000
4. Procurements. - 15.200
a) Consumption of goods for sale. - 15.200
5. Other operating revenues. 29.955
a) Accessory and other ordinary income. 26.000
b) Operating subventions included in income for the year. 3.955
6. Personnel expenses. - 8.000
a) Wages, salaries and similar expenses. - 8.000
7. Other operating expenses. - 1.200
a) Outside services. - 1.200
8. Fixed assets depreciation expense. - 14.000
9. Transfer of grants of non-financial non-current assets and others. 2.000
11. Impairment and income from disposal of non-current assets. - 1.000
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b) Income from disposals and others. - 1.000
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 47.555
12. Financial revenues. 45
b) From marketable securities and other financial instruments. 45
b 2) Of third parties. 45
13. Financial expenses. - 1.800
b) Of third parties. - 1.800
14. Change in fair value of financial instruments. 200
b) Transfer to income for the year for available for sale financial instruments. 200
A.2) FINANCIAL INCOME (12+13+14+15+16) - 1.555
A.3) INCOME BEFORE TAXES (A.1+A.2) 46.000
17. Income tax. - 16.100
A.4) INCOME FROM CONTINUING OPERATIONS (A.3+17) 29.900
A.5) INCOME FOR THE YEAR (A.4+18) 29.900
REQUIRED:
• Register the operations of 2009 described in the additional information.
• Prepare the Statement of Changes in Equity of year 2009.
• Prepare the Cash Flow Statement of year 2009 (only cash flows from operations and cash
flows from financing activities).
SOLUTION
2. The company has increased the capital stock at the beginning of 2009.
3. Long-term holdings in equity are a portfolio of stocks classified as “available for sale” that has
been sold in 2009. The increase in fair value of this portfolio was 200 in 2008.
Sale:
Nº Debit Credit
572 Cash 1,750
250 Long term holdings in equity 1,750
Nº Debit Credit
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802 Transfers of profits from available for sale financial 200
assets
7632 Profits from available for sale portfolio 200
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Capital grants, donations and legacies transferred to
746 2,000
income for the year
2009
A) Income for the year 29900
Revenues and expenses recognized directly in equity
I. From valuation of financial instruments
1. Gains/losses from available for sale financial assets
2. Other revenues/expenses
II. From hegding operations
III. Grants, donations and legacies 1500
IV. From actuarial gains and losses and other adjustments
V. Tax effect (450)
B) Total revenues and expenses recognized directly in equity
(I+II+III+IV+V) 1050
Transfers to the income statement
VI. From valuation of financial instruments
1. Revenues/expenses from available for sale financial assets -200
2. Other revenues/expenses
VII. From hegding operations
VIII. Grants, donations and legacies -2000
IX. Tax effect 660
C) Total transfers to the income statement (VI+VII+VIII+IX) -1540
TOTAL RECOGNIZED REVENUES AND EXPENSES (+A+B+C) 29410
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Capital Grants,
Additional Other (Dividend Adjustments
Prior years' Income for donations
STATEMENT OF ALL CHANGES IN EQUITY paid-in Reserves
income
owners'
the year
paid in for changes in
and legacies
TOTAL
capital contributions advance) value
Registered Uncalled received
C. BALANCE, END OF YEAR 200X – 1 100.000 20.000 -4.000 140 7.000 123.140
I. Adjustments for changes in accounting policies, 200X-1.
D. ADJUSTED BALANCE, BEGINNING OF YEAR 200X 100.000 20.000 - 4.000 140 7.000 123.140
I. Total recognized revenues and expenses. 29.900 -140 -350 29.410
II. Transactions with equity holders.
4. ( - ) Dividends distributions. -
5. Transactions with the entity's shares (net).
33
A) CASH FLOWS FROM OPERATING ACTIVITIES 200X
1. Income before taxes 46.000
2. Adjustments to income 14.555
a) Depreciation of fixed assets (+). 14.000
b) Value corrections for impairment (+/-).
c) Change in provisions (+/-).
d) Transfer of grants (-). - 2.000
e) Income from disposal of non-current assets (+/-). 1.000
f) Income from disposal of financial instruments (+/-).
g) Financial revenues (-). - 45
h) Financial expenses (+). 1.800
i) Exchange differences (+/-).
j) Change in fair value of financial instruments (+/-). - 200
k) Other revenues and expenses (-/+).
3. Changes in working capital - 16.300
a) Inventory (+/-). - 6.000
b) Accounts receivables and other receivables (+/-). - 4.000
c) Other current assets (+/-).
d) Accounts payables and other payables (+/-). - 6.300
e) Other current liabilities (+/-).
f) Other non-current assets and liabilities (+/-).
4. Other cash flows from operating activities - 8.970
a) Cash payments of interests (-). - 1.800
b) Cash receipts of dividends (+).
c) Cash receipts of interests (+). 180
d) Cash receipts (payments) for income taxes (+/-). - 7.350
e) Other cash payments (receipts) (-/+)
5. Cash flows from operating activities (+/-1+/-2+/-3+/-4) 35.285
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EXERCISE 11 LESSON 7 – From exam of course 0708
Company RST, Ltd. provides the following information at the end of 2009:
ACCOUNT AMOUNT
Change in inventory of goods for sale 700
Grants, donations and legacies transferred to income
50
for the year
Income tax expense 200
Interest of debt from financial institutions 1,020
Losses for uncollective accounts 50
Losses from impairment of trade accounts receivable 50
Operating grants, donations and legacies 176
Profits from disposal of investment property 500
Profits from disposal of tangible fixed assets 50
Profits from held for trading portfolio 25
Purchase of goods for sale 20,000
Revenue form holdings in equity instruments, other
50
companies
Sale of goods for sale 30,500
Sale returns of goods for sale 500
Social security in charge of the company 1,000
Supplies 600
Tangible fixed assets depreciation expense 1,200
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Wages and salaries 5,000
1.- The distribution of income of 2008 has been the following: reserves: 150; dividends: 250.
2.- A machinery has been sold for 100 m.u. during 2009. The acquisition value of the machinery
was 250 m.u. and the accumulated depreciation in the moment of the sale was 200 m.u.
Moreover, a new machinery was bought at the end of the year.
3.- Investment property (land) has been sold as well.
4.- The capital grant was obtained and received in cash at the end of 2008. The grant was
received to finance the acquisition of new equipment that has an annual depreciation expense of
50 m.u.
5.- Accrual accounts in the current assets are interest expenses paid in advance.
6.- During 2009 the company has bought an investment in shares of the BBVA that has been
classified as held for trading.
7.- The company has increased the capital stock at the beginning of 2009.
REQUIRED:
• Prepare the Income Statement of year 2009.
• Prepare the Statement of Changes in Equity of year 2009.
• Prepare the Cash Flow Statement of year 2009.
36
SURNAME____________________________________ NAME_____________
D.N.I._________________
INCOME STATEMENT
(Debit) Credit
2009
A) CONTINUING OPERATIONS
1. Net turnover. 30,000
a) Sales. 30,000
b) Services rendered.
2. Change in inventory of finished goods and work-in process.
3. Work performed for own assets.
4. Procurements. -20,700
a) Consumption of goods for sale. -20,700
b) Consumption of raw materials and other consumables.
c) Work performed by other companies.
d) Impairment of goods for sale, raw materials and other consumables.
5. Other operating revenues. 176
a) Accessory and other ordinary income.
b) Operating subventions included in income for the year. 176
6. Personnel expenses. -6,000
a) Wages, salaries and similar expenses. -5,000
b) Employee welfare expenses. -1,000
c) Provisions.
7. Other operating expenses. -700
a) Outside services. -600
b) Taxes other than income tax.
c) Losses, impairment and change in provisions for trade operations. -100
d) Other operating expenses.
8. Fixed assets depreciation expense. -1,200
9. Transfer of grants of non-financial non-current assets and others. 50
10. Excess of provisions.
11. Impairment and income from disposal of non-current assets. 550
a) Impairment and losses.
b) Income from disposals and others. 550
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 2,176
37
12. Financial revenues. 50
a) From holdings in equity instruments.
a1) Of subsidiaries and associated companies.
a2) Of third parties. 50
b) From marketable securities and other financial instruments.
b 1) Of subsidiaries and associated companies.
b 2) Of third parties.
13. Financial expenses. -1,020
a) Of subsidiaries and associated companies.
b) Of third parties. -1,020
c) From capitalization of provisions.
14. Change in fair value of financial instruments. 25
a) Held for trading and others. 25
b) Transfer to income for the year for available for sale financial instruments.
15. Exchange diferences.
16. Impairment and income from disposal of financial instruments.
a) Impairment and losses.
b) Income from disposals and others.
A.2) FINANCIAL INCOME (12+13+14+15+16) -945
A.3) INCOME BEFORE TAXES (A.1+A.2) 1,231
17. Income tax. -200
A.4) INCOME FROM CONTINUING OPERATIONS (A.3+17) 1,031
B) DISCONTINUED OPERATIONS
18. Post-tax income of discontinued operations.
A.5) INCOME FOR THE YEAR (A.4+18) 1,031
38
SURNAME____________________________________ NAME_____________
D.N.I._________________
39
Capital Grants,
STATEMENT OF ALL CHANGES IN Additional Other (Dividend Other Adjustments
Prior years' Income for donations and
paid-in Reserves owners' paid in equity for changes in TOTAL
EQUITY income the year legacies
capital contributions advance) instruments value
Registered Uncalled received
C. BALANCE, END OF YEAR 2008 6,000 700 400 -100 350 7,350
I. Adjustments for changes in accounting policies, 2008
II. Adjustments for errors, 2008
D. ADJUSTED BALANCE, BEGINNING OF YEAR 2009 6,000 700 400 0 -100 350 7,350
I. Total recognized revenues and expenses. 1,031 -35 996
II. Transactions with equity holders.
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A) CASH FLOWS FROM OPERATING ACTIVITIES
1. Income before taxes 1.231
2. Adjustments to income 1.545
a) Depreciation of fixed assets (+). 1.200
b) Value corrections for impairment (+/-).
c) Change in provisions (+/-). 0
d) Transfer of grants (-). -50
e) Income from disposal of non-current assets (+/-). -550
f) Income from disposal of financial instruments (+/-). 0
g) Financial revenues (-). -50
h) Financial expenses (+). 1.020
i) Exchange differences (+/-).
j) Change in fair value of financial instruments (+/-). -25
k) Other revenues and expenses (-/+).
3. Changes in working capital -620
a) Inventory (+/-). 700
b) Accounts receivables and other receivables (+/-). -450
c) Other current assets (+/-). 0
d) Accounts payables and other payables (+/-). -870
e) Other current liabilities (+/-). 0
f) Other non-current assets and liabilities (+/-).
4. Other cash flows from operating activities -1.101
a) Cash payments of interests (-). -1.025
b) Cash receipts of dividends (+). 50
c) Cash receipts of interests (+). 0
d) Cash receipts (payments) for income taxes (+/-). -126
e) Other cash payments (receipts) (-/+)
5. Cash flows from operating activities (+/-1+/-2+/-3+/-4) 1.055
B) CASH FLOWS FROM INVESTMENT ACTIVITIES
6. Cash payments for investments (-) -500
a) Subsidiaries and associated companies.
b) Intangible assets.
c) Tangible fixed assets.
d) Investment property.
e) Other financial assets. -500
f) Non-current assets held for sale.
g) Other assets.
7. Cash receipts from disinvestments (+) 1.600
a) Subsidiaries and associated companies.
b) Intangible assets.
c) Tangible fixed assets. 100
d) Investment property. 1.500
e) Other financial assets.
f) Non-current assets held for sale.
g) Other assets.
8. Cash flows from investment activities (7-6) 1.100
41
C) CASH FLOWS FROM FINANCING ACTIVITIES
9. Cash receipts and payments for equity instruments 550
a) Issuing of equity instruments (+). 550
b) Amortization of equity instruments (-).
c) Acquisition of the own equity instruments (-).
d) Disposal of the own equity instruments (+).
e) Grants, donations and legacies received (+).
10. Cash receipts and payments for debt instruments -820
a) Issuing of
1. Debentures and other negotiable securities (+).
2. Long term debt payable to credit institutions (+).
3. Long term debt payable to subsidiaries and associated
companies (+).
4. Other debt (+).
b) Refunds and amortization of
1. Debentures and other negotiable securities (-).
2. Long term debt payable to credit institutions (-). -820
3. Long term debt payable to subsidiaries and associated
companies (-).
4. Other debt (-).
11. Cash payments of dividends and remuneration of other equity instruments. -150
a) Dividends (-). -150
b) Remuneration of other equity instruments (-).
12. Cash flows from financing activities (+/-9+/-10-11) -420
D) Effect of changes in exchange rates
E) NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 1.735
Cash and equivalents at the beginning of the period 1.105
Cash and equivalents at the end of the period 2.840
42