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Sir some of the adjustments are some times made in operating some times in Investing and sometimes in Financing. I know that it will be mentioned clearly in paper for the dividend paid to be adjusted in which of the three. But there are some more I have noticed while solving the questions of Cash flow.
1. Investment properties ( rentals rcvd) is included in Operating as well as Investing activity.
2. Gov. Grant Income included in O.A and I.A
3. Redemption of debt instruments adj. in F.A and I.A
4. Interest rcvd adj. in O.A and I.A
How to know where to adjust them?Provision for any thing may include which items? It is included in O.A
Inc. in warranty provisions is included in O.A in the adj. for changes in working capital. It is added so any dec. may reduce the changes in working capital?
When you say “included in Operating as well as in Investing” isn’t it the case that it’s being deducted in one and added in the other?
For example, investment income should be deducted from the profit figure (so appears as an adjustment in operating) and should be shown as an inflow in investing and thus it is “included in Operating as well as in Investing”
Government grants, the same
Interest received, the same
Redemption of debt instruments – if we had an investment in debt instruments as an investment, then redemption of those debts would be like selling proceeds from an asset sale
If we had raised finance by way of debt instruments, then redemption would be repayment of financing activities.
“Provision for any thing may include which items?” Provision movements, being non-cash, will always be adjusted in operating activities
“Inc. in warranty provisions is included in O.A in the adj. for changes in working capital. It is added so any dec. may reduce the changes in working capital?” – agreed
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