Under cash from operating activities we subtracted 'investment income'. Down at cash flow from investing we added 'dividend received' of the same amount. the net effect of this on cash flow is zero. i was wondering if this is the case in practice or is some kind of standard stuff there to be bowed to. isn't this wastage of time?
thanks.
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Hi,
No it isn't a wastage of time and it is following the rules of IAS 7. In the operating activities, we are adjusting the profit before tax to get to an operating profit figure that is then adjusted for movements in working capital to get the cash flow figure.
We then record the cash inflow within the investing activities. The figure is not necessarily always the same, so be careful. The figures are only the same if there is no opening/closing interest receivable balance.
Thanks
Thank you. well understood.
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