IAS 7 Revised: Statement of Cash Flows – Example 6

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  1. Avatar of castrin196michael castrin196michael says:
    May 25, 2013 at 11:28 am

    Hi,

    Can someone help me with the treatment of interest under operating cash flow please?

    In Kaplan exam kit some of the answers do not add interest expense and then deduct it but instead they just deduct it, so my question is when do I add and deduct and when do I simply deduct it? Is there something in the question that need to watch out for?

    Thank you.

    • Avatar of MikeLittle MikeLittle says:
      May 25, 2013 at 12:18 pm

      The start point is pbt. If interest has NOT been deducted in arriving, but the start given is pbit, then we need to deduct interest to arrive at pbt. That’s the top figure in the cash flow.

      One of the first things we then do is add the interest back – the same figure we have just deducted.

      Then we need to calculate the amount of interest actually paid and deduct that as Cash paid in the operating activities of the Statement of Cash Flows

      Does that clear it up for you?

  2. Avatar of opsy4ril opsy4ril says:
    April 8, 2013 at 10:52 pm

    Thank You very much Mike for your Teachings. Being listening to the Lectures and I understand it clearly.

  3. Avatar of leousman leousman says:
    March 6, 2013 at 7:41 am

    In SCF, which profit figure to be used, Profit before Tax or Profit before Tax & Finance Cost?

  4. Avatar of guybokole23 guybokole23 says:
    January 12, 2013 at 7:55 pm

    what is the difference between cash and profit?

  5. Avatar of niko123 niko123 says:
    October 20, 2012 at 4:08 am

    dear lecture is the layout of statement of cash flow will be given in the exam?

  6. Avatar of valenyap86 valenyap86 says:
    October 7, 2012 at 11:05 am

    can someone teach me how to get the revaluation amount of $110,000?

    thanks a lot.

  7. Avatar of r2d2 r2d2 says:
    October 1, 2012 at 5:13 pm

    hello, good example but I’m confused about one thing…in arriving at the figure of (239) for purchase of investments, why is the 32 taken away from to get 364…..isn’t that 32 related to the receivables?

  8. Avatar of aardvark aardvark says:
    September 26, 2012 at 9:35 pm

    I have noticed in the notes I printed that investments in 2009 are 396
    in your answer they are 364.
    it stumped me for ages….

    yours sincerely

  9. Avatar of alextrunghuynh alextrunghuynh says:
    September 21, 2012 at 1:37 pm

    Can you help me with the “1 for 4 bonus” part? I don’t get it why it is valued at $75,000 from the share premium account. Thanks.

    • Avatar of MikeLittle MikeLittle says:
      September 21, 2012 at 6:47 pm

      @alextrunghuynh, Ok … what’s the problem? The calculation to arrive at 75,000 or the fact that the debit entry has gone to Share Premium? ( The credit entry has gone to increase the Share Capital from 300,000 to 375,000 )

      If the problem is the calculation of 75,000 that’s easily sorted! How many shares were in existence at the date just before the bonus issue? Last year’s shares brought forward = 300,000. A “1 for 4″ bonus issue means that, for every 4 shares you previously held, the company will give you 1 more share. So, for 300,000 shares there will be an additional 75,000 shares issued as bonus shares.

      If the problem is “Why the Share Premium Account” it’s because there are only four allowable uses of the Share Premium, and the most valuable one – where you can use up the greatest amount of Share Premium. So, we’ve calculated 75,000 and I’ve explained WHY the Share Premium Account. The double entry to record the bonus is therefore is Debit Share Premium Account and Credit Share Capital Account. The entry will be recorded in the Statement of Changes in Equity

      Better?

  10. Avatar of patmho patmho says:
    June 2, 2012 at 1:55 pm

    maybe I am having blonde moments. I accessed the lecture where can I get the questions, ZETA. I have been doing the revisions based on ACCA past papers but on this one I do not KNOW where the ZETA question is , please help

  11. Avatar of sohailssaeed sohailssaeed says:
    May 1, 2012 at 8:32 pm

    Really very good example 6 ALL IN ONE. moreover, for better understanding the whole cash flow. if your double entry is very strong.
    thanks
    sohail saeed

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