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PART F: PREPARING BASIC FINANCIAL STATEMENTS
392
$'000
$'000
Cash flows from financing activities
Issues of share capital (360 + 36 340 24)
32
Long-term loans repaid (500 200)
(300)
Net cash flows from financing
(268)
Decrease in cash and cash equivalents
(8)
Cash and cash equivalents at 1.1.X2
56
Cash and cash equivalents at 31.12.X2
48
Working: property, plant and equipment
COST
$'000
$'000
At 1.1.X2
1,560
At 31.12.X2
1,596
Purchases
90
Disposals (balance)
54
1,650
1,650
ACCUMULATED DEPRECIATION
$'000
$'000
At 31.12.X2
318
At 1.1.X2
224
Depreciation on disposals
Charge for year
118
(balance)
24
342
342
Carrying value of disposals (54 – 24)
30
Net loss reported
(18)
Proceeds of disposals
12
QUESTION
Statement of cash flows
Set out below are the financial statements of Shabnum Co. You are the financial controller, faced with
the task of implementing IAS 7 Statement of cash flows.
SHABNUM CO
STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 20X2
$'000
Revenue
2,553
Cost of sales
(1,814)
Gross profit
739
Distribution costs
(125)
Administrative expenses
(264)
350
Interest received
25
Interest paid
(75)
Profit before taxation
300
Taxation
(140)
Profit for the year
160
SHABNUM CO
STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER
20X2
20X1
$'000
$'000
Assets
Non-current assets
Property, plant and equipment
380
305
Intangible assets
250
200
Investments
–
25
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CHAPTER 22
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STATEMENTS OF CASH FLOWS
393
20X2
20X1
$'000
$'000
Current assets
Inventories
150
102
Receivables
390
315
Short-term investments
50
–
Cash in hand
2
1
Total assets
1,222
948
Equity and liabilities
Equity
Share capital ($1 ordinary shares)
200
150
Share premium account
160
150
Revaluation surplus
100
91
Retained earnings
260
180
Non-current liabilities
Loan
170
50
Current liabilities
Trade payables
127
119
Bank overdraft
85
98
Taxation
120
110
Total equity and liabilities
1,222
948
The following information is available.
(a)
The proceeds of the sale of non-current asset investments amounted to $30,000.
(b)
Fixtures and fittings, with an original cost of $85,000 and a carrying amount of $45,000, were
sold for $32,000 during the year.
(c)
The following information relates to property, plant and equipment.
31.12.20X2 31.12.20X1
$'000
$'000
Cost
720
595
Accumulated depreciation
340
290
Carrying amount
380
305
(d)
50,000 $1 ordinary shares were issued during the year at a premium of 20c per share.
(e)
Dividends totalling $80,000 were paid during the year.
(f)
The short term investments meet the requirements to be classified as cash equivalents.
Required
(a)
Prepare the net cash flows from operating activities for the year to 31 December 20X2 using the
indirect method and the format laid out in IAS 7.
(6 marks)
(b)
Prepare the net cash flows from investing activities for the year to 31 December 20X2 using the
format laid out in IAS 7.
(4 marks)
(c)
Which one of the following options gives the net cash flows from financing activities for the year?
A $180k inflow
B $189k outflow
C $350k outflow
D $360k inflow
(2marks)
(d)
Prepare the note to the statement of cash flows for the year to 31 December 20X2 using the
format laid out in IAS 7.
(3 marks)
Total marks for the question
(15 marks)
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PART F: PREPARING BASIC FINANCIAL STATEMENTS
394
ANSWER
(a)
Net cash flows from operating activities
$'000
$'000
Net cash flows from operating activities
Profit before tax
300
Depreciation charge (W1)
90
Interest expense
50
Loss on sale of property, plant and equipment (45 – 32)
13
Profit on sale of non-current asset investments (30 – 25)
(5)
(Increase)/decrease in inventories
(48)
(Increase)/decrease in receivables
(75)
Increase/(decrease) in payables
8
Cash generated from operating activities 333
Interest paid
(75)
Tax paid (W3)
(130)
Net cash flow from operating activities
128
(b)
Net cash flows from investing activities
Cash flows from investing activities
Payments to acquire property, plant and equipment (W2)
(201)
Payments to acquire intangible non-current assets (250 – 200)
(50)
Interest received
25
Receipts from sales of property, plant and equipment
32
Receipts from sale of non-current asset investments
30
Net cash flows from investing activities
(164)
(c)
Net cash flows from financing activities
A $180k inflow
Cash flows from financing activities
Issue of share capital (200 + 160 – 150 – 150)
60
Dividends paid
(80)
Long-term loan (170 – 50)
120
Net cash flows from financing
100
(d)
Note to the statement of cash flows
NOTES TO THE STATEMENT OF CASH FLOWS
Note. Analysis of the balances of cash and cash equivalents as shown in the statement of
financial position
Change
20X2
20X1
in year
$'000
$'000
$'000
Cash in hand
2
1
1
Short-term investments
50
–
50
Bank overdraft
(85)
(98)
13
(33)
(97)
64
Workings
1
Depreciation charge
$'000
$'000
Depreciation at 31 December 20X2
340
Depreciation at 31 December 20X1
290
Depreciation on assets sold (85 45)
40
250
Charge for the year
90
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CHAPTER 22
//
STATEMENTS OF CASH FLOWS
395
2
Purchase of property, plant and equipment
PROPERTY, PLANT AND EQUIPMENT
$'000
$'000
1.1.X2 Balance b/d
595
Disposals
85
Revaluation (100 91)
9
Purchases (bal. fig.)
201
31.12.X2 Balance c/d
720
805
805
3
Tax paid
TAX
$'000
$'000
Tax paid (bal. fig.)
130
1.1.X2 Balance b/d
110
31.12.X2 Balance c/d
120
P/L charge
140
250
250
Although you were not asked to prepare it, the full statement of cash flows follows so you can see where
everything goes. You may wish to prepare the full statement yourself as question practice, before
looking at the answer.
SHABNUM CO
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 20X2
$'000 $'000
Net cash flows from operating activities
Profit before tax
300
Depreciation charge (W1)
90
Interest expense
50
Loss on sale of property, plant and equipment (45 – 32)
13
Profit on sale of non-current asset investments (30 – 25)
(5)
(Increase)/decrease in inventories
(48)
(Increase)/decrease in receivables
(75)
Increase/(decrease) in payables
8
Cash generated from operating activities 333
Interest paid
(75)
Tax paid (110 + 140 – 120)
(130)
Net cash flow from operating activities
128
Cash flows from investing activities
Payments to acquire property, plant and equipment (W2)
(201)
Payments to acquire intangible non-current assets (250 – 200)
(50)
Interest received
25
Receipts from sales of property, plant and equipment
32
Receipts from sale of non-current asset investments
30
Net cash flows from investing activities
(164)
Cash flows from financing activities
Issue of share capital (200 + 160 – 150 – 150)
60
Dividends paid
(80)
Long-term loan (170 – 50)
120
Net cash flows from financing
100
Increase in cash and cash equivalents (Note)
64
Cash and cash equivalents at 1.1.X2 (Note)
(97)
Cash and cash equivalents at 31.12.X2 (Note)
(33)
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