ADVANCED CASES FOR CFS - TESTBANK CASE 1

CASE 1:
Step 1: Read all additional information/Notes to note OCF, ICF or FCF
Step 2: Explore IS in short given form and compute the Changes in CA and CL
Step 3: find the movement of Cash and Cash equivalents for the year:
x2 x1
Cash 37,470 3,800
Gov bonds (note 9) 40,000 10,000
Bank overdraft 51,200 27,230
Delta/changes of cash and cash equivalents 26,270 - 13,430
OCF + ICF + FCF = 39,700
Step 4: OCF calculation: indirect method
Profit before tax 730,040
Adjustments:
1/Non-cash items:
Depreciation ex 232,900 Note 2 PPE (net book value)
Amortisation ex 21,200 Self-compute 797,500
Impairment loss 20,000 note 8
Bad debts ex (if any) 13,900
2/Non-operating items: x???
Investments income(if any)
Gain/loss retire bonds (if any) 982,600
Gain on disposal of Intangibles - 7,000 Self-compute
Loss on disposal of PPE 84,810 Self-compute x = 545800
Finance cost (Interest ex) 89,600 IS
3/Changes in CA and CL:
Delta of Inv - 144,490 ok
Delta of TR - 118,550 ok
Movements of Trade payables - 3,100 ok
Cash from operations 905,410
Tax paid (cash payment) - 236,420 ok
Interest paid (cash payments) - 92,200 ok
Net OCF 576,790

FCF: analyze NCL and Equity accounts Borrowings (ST and LT)
474,000
 X = 209,000
(cash receipts
- from borrowings

683,000
Fully explained
Share capital
232,800

23,280

Z1? = 56,320

312,400

Bonus issue: 10 for 1:

10 old shares: 1 new shares
232,800 shares

Dr Share premium
Cr Share capital

From T accounts, We know there is additional issue of share

Dr Cash
Cr SC
Cr SP

FCF = 126,800 + 209,000 + 75,000 - 231,640 =

OCF + ICF + FCF =
PPE (net book value) Intangibles (NBV)
386,900
127,800 (note 1) 251,340 17,000 Note 4
232,900 Note 4 20,000 Note 8
Y??? Amortisation ex

580,040

Y = 21,200 OCF
Book entries to find Gain/loss from retiring PPE/Intangibles:
Disposing PPE (note 1): Cash payment for Purchasing PPE:
Dr Cash 42,990 ICF Dr Ppe
Dr Loss from disposal of Ppe 84,810 OCF Cr Trade payables
Cr Cash
Cr PPE - NBV 127,800 Cash payment for purchasing Intangibles:
Disposing Intangibles (note 4) Dr Intangibles
Dr Cash 24,000 ICF Cr Cash
Cr Gain on disposal of Intangibles 7,000 OCF
Cr Intangibles 17,000

ICF:
Cash receipts from disposing PPE: 42,990
Cash receipts from disposing intangibles: 24,000
Cash payments for purchasing PPE: - 531,900
Cash payments for purchasing Intangibles: - 251,340
Net ICF = - 716,250
Preference shares
FCF -
 X = 75,000
(cash receipts
Dr Cash 209,000 Dr Cash 75,000 FCF
from issuing
preference
Cr Borrowi 209,000 share) Cr P.S 75,000

75,000
Fully explained

Share premium retained earnings

351,000 282,100
bonus issue
Y? div paid
23,280 Z2? = 70,480 =231,640 NI = 484,340
bonus issue

398,200 534,800

d shares: 1 new shares Declare and paid dividends:

23,280 new shares 1 pound each share Dr Retained earnings 231,640
Cr Div payables 231,640
are premium 23,280 Dr Div payables 231,640
Cr Share capital 23,280 Cr Cash 231,640

now there is additional issue of shares:

126,800 FCF Present FCF:
56,320 Cash receipts from borrowings 209,000
70,480 Cash receipts from preference shares 75,000
Cash receipts from additional issue of shares 126,800
00 + 75,000 - 231,640 = 179,160 Cash payment from dividend payables - 231,640
39,700
 Tax payable Tax Ex Interest payables/Accruals
192,520

X1? 245,700 Tax ex on IS 245,700 X2?

201,800

236,420

or Purchasing PPE:
545,800
13,900
531,900 ICF
or purchasing Intangibles:
251,340
251,340 ICF
I = 484,340

FCF
nterest payables/Accruals Interest ex/Finance cost
12,350

89,600 Finance cost 89,600

9,750

92,200
ADVANCED CASES FOR CFS - TESTBANK CASE 5
CASE 1:
Step 1: Read all additional information/Notes to note OCF, ICF or FCF
Step 2: Explore IS in short given form and compute the Changes in CA and CL
Step 3: find the movement of Cash and Cash equivalents for the year:
x2 x1
Cash 180,000 20,200
Gov bonds (note 9) 105,000 100,000
Bank overdraft
Delta/changes of cash and cash equivalents 285,000 120,200
OCF + ICF + FCF = 164,800
Step 4: OCF calculation: indirect method
Profit before tax 866,100
Adjustments:
1/Non-cash items:
Depreciation ex 750,600 Note 3 PPE (net book value)
Amortisation ex Self-compute 2,950,300
Impairment loss 12,000 note 2
Bad debts ex (if any) 2,057,000
2/Non-operating items: 600,000
Investments income(if any) (note 3)
Gain/loss retire bonds (if any) 4,360,400
Gain on disposal of Intangibles Self-compute
Loss on disposal of PPE 55,000 Self-compute X1 = 496300
Finance cost (Interest ex) 99,000 IS
3/Changes in CA and CL:
Delta of Inv - 95,500 ok
Delta of TR - 24,500 ok
Movements of Trade payables 58,900 ok
Cash from operations 1,721,600
Tax paid (cash payment) - 357,600 ok
Interest paid (cash payments) - 99,000 ok
Net OCF 1,265,000

FCF: analyze NCL and Equity accounts Loan

472,000
 516,000 600,000

556,000
Fully explained
Share capital
1,800,000

180,000

Z1? = 1020000

3,000,000

Bonus issue: 10 for 1:

10 old shares: 1 new shares
1800000 shares

Dr Share premium
Cr Share capital

From T accounts, We know there is additional issue of share

Dr Cash
Cr SC
Cr SP

FCF = 516000 - 150000 + 1400000 - 500000 =

OCF + ICF + FCF =
PPE (net book value) Investment
156,000
750,600 X = 28000 12,000 Note 2
X1??

172,000

Book entries to find Gain/loss from retiring PPE/Intangibles:

Disposing PPE (note 1): Cash payment for Purchasing PPE:
Dr Cash 441,300 ICF Dr Ppe
Dr Loss from disposal of Ppe 55,000 OCF Cr Cash

Cr PPE - NBV 496,300 Cash payment for purchasing Intangibles:

(note7) Dr Investment 28,000 ICF

Cr Trade payables 10,000
Cr Cash 18,000

ICF:
Cash receipts from disposing PPE: 441,300
Cash payments for purchasing PPE: - 2,057,000
Cash payments for investment - 18,000
Net ICF = - 1,633,700

Preference shares
FCF -
 X = 150,000
(cash receipts
Dr Loan 516,000 Dr Cash 150,000 FCF
from issuing
preference
Cr Cash 516,000 share) Cr P.S 150,000

150,000
Fully explained

Share premium retained earnings

850,000 74,500
bonus issue
Y? div paid =
180,000 Z2? = 380000 500500 NI = 568500
bonus issue

1,050,000 142,500

d shares: 1 new shares Declare and paid dividends:

180000 new shares 1 pound each share Dr Retained earnings 500,500
Cr Div payables 500,500
are premium 180,000 Dr Div payables 500,500
Cr Share capital 180,000 Cr Cash 500,500

now there is additional issue of shares:

1,400,000 FCF Present FCF:
1,020,000 Cash receipts from preference shares 150,000
380,000 Cash payment for loan - 516,000
Cash receipts from additional issue of shares 1,400,000
+ 1400000 - 500000 = 533,500 Cash payment from dividend payables - 500,500
164,800
 Tax payable Tax Ex
350,000

X1? 297,600 Tax ex on IS 297,600

300,000

347,600

r Purchasing PPE:
2,057,000
2,057,000 ICF

r purchasing Intangibles:
FCF
ADVANCED CASES FOR CFS - TESTBANK CASE 1
CASE 1:
Step 1: Read all additional information/Notes to note OCF, ICF or FCF
Step 2: Explore IS in short given form and compute the Changes in CA and CL
Step 3: find the movement of Cash and Cash equivalents for the year:
x2 x1
Cash
Gov bonds (note 9)
Bank overdraft
Delta/changes of cash and cash equivalents 10,700 20,200
OCF + ICF + FCF = - 9,500
Step 4: OCF calculation: indirect method
Profit before tax 886,100
Adjustments:
1/Non-cash items:
Depreciation ex 750,600 Note 2 PPE (net book value)
Amortisation ex 12,300 Self-compute 797,500
Impairment loss 15,000 note 8
Bad debts ex (if any) 13,900
2/Non-operating items: x???
Investments income(if any)
Gain/loss retire bonds (if any) 982,600
Gain on disposal of Intangibles - 7,000 Self-compute
Loss on disposal of PPE 84,810 Self-compute x = 545800
Finance cost (Interest ex) 89,600 IS
3/Changes in CA and CL:
Delta of Inv - 144,490 ok
Delta of TR - 118,550 ok
Movements of Trade payables - 3,100 ok
Cash from operations 1,565,270
Tax paid (cash payment) - 236,420 ok
Interest paid (cash payments) - 92,200 ok
Net OCF 1,236,650

FCF: analyze NCL and Equity accounts Borrowings (ST and LT)
474,000
 X = 209,000
(cash receipts
- from borrowings

683,000
Fully explained
Share capital
232,800

23,280

Z1? = 56,320

312,400

Bonus issue: 10 for 1:

10 old shares: 1 new shares
232,800 shares

Dr Share premium
Cr Share capital

From T accounts, We know there is additional issue of share

Dr Cash
Cr SC
Cr SP

FCF = 126,800 + 209,000 + 75,000 - 231,640 =

OCF + ICF + FCF =
PPE (net book value) Intangibles (NBV)
300,500
127,800 (note 1) 77,500 Note 4
232,900 Note 4 15,000 Note 8
Y??? Amortisation ex

350,700

Y = 12300 OCF
Book entries to find Gain/loss from retiring PPE/Intangibles:
Disposing PPE (note 1): Cash payment for Purchasing PPE:
Dr Cash 42,990 ICF Dr Ppe
Dr Loss from disposal of Ppe 84,810 OCF Cr Trade payables
Cr Cash
Cr PPE - NBV 127,800 Cash payment for purchasing Intangibles:
Disposing Intangibles (note 4) Dr Intangibles
Dr Cash 24,000 ICF Cr Cash
Cr Gain on disposal of Intangibles 7,000 OCF
Cr Intangibles 17,000

ICF:
Cash receipts from disposing PPE: 42,990
Cash receipts from disposing intangibles: 24,000
Cash payments for purchasing PPE: - 531,900
Cash payments for purchasing Intangibles: - 251,340
Net ICF = - 716,250
Preference shares
FCF -
 X = 75,000
(cash receipts
Dr Cash 209,000 Dr Cash 75,000 FCF
from issuing
preference
Cr Borrowi 209,000 share) Cr P.S 75,000

75,000
Fully explained

Share premium retained earnings

351,000 282,100
bonus issue
Y? div paid
23,280 Z2? = 70,480 =231,640 NI = 484,340
bonus issue

398,200 534,800

d shares: 1 new shares Declare and paid dividends:

23,280 new shares 1 pound each share Dr Retained earnings 231,640
Cr Div payables 231,640
are premium 23,280 Dr Div payables 231,640
Cr Share capital 23,280 Cr Cash 231,640

now there is additional issue of shares:

126,800 FCF Present FCF:
56,320 Cash receipts from borrowings 209,000
70,480 Cash receipts from preference shares 75,000
Cash receipts from additional issue of shares 126,800
00 + 75,000 - 231,640 = 179,160 Cash payment from dividend payables - 231,640
699,560
 Tax payable Tax Ex Interest payables/Accruals
192,520

X1? 245,700 Tax ex on IS 245,700 X2?

201,800

236,420

or Purchasing PPE:
545,800
13,900
531,900 ICF
or purchasing Intangibles:
77,500
77,500 ICF
I = 484,340

FCF
nterest payables/Accruals Interest ex/Finance cost
12,350

89,600 Finance cost 89,600

9,750

92,200