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Acquisition of a subsidiary in the cash flow statement

Report the aggregate cash consideration paid net of cash and cash equivalents acquired as required by IAS 7, and provide relevant disclosures. Include the subsidiary’s post-acquisition cash flows in the consolidated statement only for the period in which it is controlled. Non-cash consideration is excluded from cash flows and disclosed as required. Separate classification issues apply to later ownership changes that do not change control.

Worked example

A parent pays $500,000 cash to acquire a subsidiary holding $60,000 cash. The net investing cash outflow is $440,000, assuming no other relevant cash flows or adjustments.

Common mistake

Showing the gross $500,000 alone as the net group acquisition cash flow while ignoring acquired cash, or including shares issued as cash consideration.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA SBR Direct September 2026–June 2027