Professional Documents
Culture Documents
IAS 7 - Cashflow - Statements - FinAcc - 2 - Level - 1 - 2 PDF
IAS 7 - Cashflow - Statements - FinAcc - 2 - Level - 1 - 2 PDF
IAS 7
• Note:
• Reverse the accrual principle and apply the Cash principle -
identify cash in and outflows and record them appropriately.
Anesu Daka CA (SA) - CAA
DIRECT METHOD
• Applying the direct method
Balance c/d
Taxeffect on goodwill
New Assoc- cost or FV of previously held IFRS9 Loss of sig influence (Carrying amount)- thru sale or to IFRS 3
Loss of sub- FV of retined interest as an assoc/JV Dividend paid- Bank (payment from asso/JV)
Bal c/d
Reconcile as follows:
Net Change in cash and cash equivalents XXXX
XXX
Cash and cash equivalents at the beginning of the yr
+/-Forex rate changes for foreign cash (IAS 7.28) _XX
Closing balance XXXX
Disclosures required:
• Policy of determining cash and cash equivalents - IAS 7.47
• Show the components of cash and cash equivalents - IAS 7.47
• Disclose circumstances around availability of cash
Cash flows of foreign subsidiaries - use exchange rates prevailing when the
cash flows took place [IAS 7.26]
• Cash flows of associates where the equity method is used, the statement of
cash flows should report only cash flows between the investor and the
investee;
• aggregate cash flows relating to acquisitions and disposals of subsidiaries and other business
units should be presented separately and classified as investing activities, with
specified additional disclosures. [IAS 7.39]
H Ltd acquired 80% of equity of S Ltd for 1.6 m at date of acquisition and net assets
acquired are as follows:
• Take into account the non-cash mvt arising from acquisitions and
disposals on calculation of cash movements:
• Assets
• Liabilities
• ONLY IF AFFECTED BY THE ACQUISITION OR DISPOSAL, E.G. IF ASSET ACQUIRED DOES
not have inventory there will not be an impact in the inventory account
due to acquisition of subsidiary.
• Also now calculate profit or loss on sale of subsidiary and include in
calculation of cash flows to suppliers and employees as well as the
reconciliation of profit before tax to the cash flows from operations.
• Profit from sale at date of sale is calculated as follows:
Proceeds on sale 850,000
Less % of NAV sold (75%X $1040K (780,000)
Profit/(Loss) on disposal of subsidiary 70,000