IAS 7 – CASHFLOW STATEMENT [Consolidated] – Class notes

[Indirect method]
Group name
Consolidated Statement of cash flows
For the year ended -----------------
Rs.’000 Rs.’000
Cash flow from operating activities:
Profit before tax XXX
Add: Depreciation / Amortization XXX
Loss on disposal of asset XXX
Loss on disposal of subsidiary/associate XXX
Impairment loss XXX
Impairment loss of goodwill (W-1) XXX
Total interest expense / Finance cost XXX
Bad debt expense XXX
Retirement benefits cost (e.g. gratuity) XXX
Fair value loss [P&L] XXX
Less: Interest income / Investment income (XXX)
Dividend income (XXX)
Fair value gain [P&L] (XXX)
Grant income (XXX)
Share or profit from associate [Share of PAT – URP (P to A)] (W-2) (XXX)
Profit on derecognition of earlier investment [i.e. direct investment in SS] (XXX)
Gain on disposal of subsidiary/associate (XXX)
Profit on sale of asset (XXX)
Operating profit before working capital changes: XXX
(Increase) / Decrease in debtors (XXX) / XXX
(Increase) / Decrease in stocks (XXX) / XXX
(Increase) / Decrease in advances (XXX) / XXX
(Note-2)
(Increase) / Decrease in prepayments (XXX) / XXX
Increase / (Decrease) in creditors XXX / (XXX)
Increase / (Decrease) in accruals XXX / (XXX)
Increase / (Decrease) in short term provisions XXX / (XXX)
Cash generated from operations XXX
Tax paid / Tax refund (XXX) / XXX
Retirement benefits paid (XXX)
Interest / Finance cost paid (XXX)
Cash inflow / (Outflow) from operating activities (A) XXX

Cash flow from investing activities:

Purchase of PPE (XXX)
Sale of PPE XXX
Purchase of investment property (XXX)
Sale of investment property XXX
Purchase of intangible asset (XXX)
Sale of intangible asset XXX
Expenditure on capital WIP (XXX)

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 IAS 7 – CASHFLOW STATEMENT [Consolidated] – Class notes

Long term deposits (XXX)

Govt. grant received XXX
Govt. grant repaid (XXX)
Purchase of subsidiary (W-3) (XXX)
Sale of subsidiary (W-4) XXX
Purchase of associate (W-2) (XXX)
Sale of associate XXX
Purchase of investment (XXX)
Sale of investment XXX
Interest received XXX
Dividend received from associate (W-2) XXX
Dividend received XXX
Cash inflow / (outflow) from investing activities (B) XXX

Cash flow from financing activities:

Issue of shares XXX
Issue of shares to NCI XXX
Proceeds from loan XXX
Dividend paid (XXX)
Dividend paid to NCI (W-5) (XXX)
Repayment / redemption of loan (XXX)
Repayment of lease liabilities (XXX)
Cash inflow / (outflow) from financing activities (C) XXX
Net cash inflow / (outflow) during the year (A + B + C) XXX
Cash and cash equivalents at start of year XXX
Cash and cash equivalents at end of year XXX

CASH AND CASH EQUIVALENTS:

Opening Closing
Cash in hand XXX XXX
Bank balance XXX XXX
Bank overdraft / running finance (XXX) (XXX)
Short term investments (e.g. treasury bills) XXX XXX
XXX XXX
Exchange gain / (loss) on cash & cash equivalent XXX -
XXX XXX

OTHER EXAM NOTES:

1. Inter-company receipts and payments are eliminated (i.e. not shown on consolidated cashflow statement)
2. While calculating working capital changes DEDUCT:
- Value (at acquisition date) of relevant asset/liability of S acquired during the year FROM year-end
balance of corresponding asset/liability
- Value (at disposal date) of relevant asset/liability of S disposed during the year FROM year-start
balance of corresponding asset/liability.

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 IAS 7 – CASHFLOW STATEMENT [Consolidated] – Class notes

3. In all other workings we studied in revision, put values at acquisition date and values at disposal date of
assets/liabilities arising on purchase of subsidiary and disposal of subsidiary respectively during the year in relevant
accounts as non-cash items. For example:

PPE at NBV

Opening balance (NBV) XXX Disposal (NBV) XXX

Addition: Revaluation loss XXX
- Cash (balancing) XXX Depreciation XXX
- Non cash XXX Impairment loss XXX
Recognized on acquisition of subsidiary XXX Derecognized on disposal of subsidiary XXX
Transfer from capital WIP (W – 11) XXX Closing balance (NBV) XXX
Revaluation gain XXX
Leased during the year (W – 17) XXX

WORKINGS
W–1 Impairment loss of goodwill
Goodwill

Opening balance XXX Carrying amount of goodwill derecognized XXX

on disposal of subsidiary during the year

Goodwill arising on acquisition of subsidiary XXX Impairment loss XXX

during the year
Closing balance XXX

W–2 Investment in associates

Investment in associates

Opening balance XXX Share of dividend declared by associate XXX

during the year

New investment in associate made during XXX Carrying amount of investment in associate XXX
the year derecognized during the year

Share of PAT for the year XXX URP on goods/PPE [P to A] XXX

Share of OCI for the year XXX Closing balance XXX

Dividend received from associate

= Opening dividend receivable + Share of dividend declared by associate – Closing dividend receivable

W–3 Purchase of subsidiary

Purchase of subsidiary = Cash consideration paid – Cash & cash equivalents of S at acquisition date

W–4 Sale of subsidiary

Sale of subsidiary = Cash consideration received – Cash & cash equivalents of S at disposal date

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 IAS 7 – CASHFLOW STATEMENT [Consolidated] – Class notes

W–5 Dividend paid to NCI

NCI

NCI share of dividend declared by S during XXX Opening balance XXX

the year

NCI derecognized on disposal of subsidiary XXX TCI attributable to NCI XXX

during the year

Closing balance XXX NCI recognized at acquisition of subsidiary XXX

during the year

Dividend paid to NCI

= Opening dividend payable + NCI share of dividend declared by S – Closing dividend payable

[Direct method]
Group name
Consolidated Statement of cash flows
For the year ended -----------------
Rs.’000 Rs.’000
Cash flow from operating activities:
Receipts from customers (W-1) XXX
Payments to suppliers (W-2) (XXX)
Payment for other operating expenses (W-3) (XXX)
Cash generated from operations XXX
``
``
Remaining format after “cash generated from operations” is exactly
same as Indirect method
``
``
W–1 Receipts from customers
Debtors

Opening balance (Gross) XXX Bad debts written off XXX

Recognized on acquisition of subsidiary XXX Derecognized on disposal of subsidiary XXX
Sales XXX Receipts (balancing) XXX
Closing balance (Gross) XXX

W–2 Payments to suppliers

Creditors

Payments (balancing) XXX Opening creditors XXX

Derecognized on disposal of subsidiary XXX Recognized on purchase of subsidiary XXX
Closing creditors (Note) XXX Purchases (from Inventory account) XXX

Inventory

Opening stock XXX Cost of sales XXX

Recognized on purchase of subsidiary XXX Derecognized on disposal of subsidiary XXX
Purchases (balancing) XXX Closing stock XXX

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 IAS 7 – CASHFLOW STATEMENT [Consolidated] – Class notes

W–3 Payment for other operating expenses

Operating expenses

Opening advances & prepayments XXX Opening accrued expenses XXX

Accrued expenses derecognized on disposal XXX Accrued expenses recognized on purchase of XXX
of subsidiary subsidiary
Recognition of prepayments on purchase of XXX Derecognition of prepayments on disposal XXX
subsidiary of subsidiary
Payments (balancing) XXX Operating expenses (Note) XXX
Closing accrued expenses XXX Closing advances & prepayments XXX

Notes – Operating expenses = Admin expenses + Distribution cost + Other expenses – Depreciation – Amortization
– Bad debt expense – Impairment loss – retirement benefit expense – loss on disposal of
asset/subsidiary – fair value loss – exchange loss

DISCLOSURES
1. When subsidiary is purchased or disposed during the year, following shall be disclosed:
- Total consideration paid or received
- Portion of consideration consisting of cash and cash equivalents
- Amount of cash and cash equivalents in subsidiaries purchased or disposed
- Amount of assets and liabilities other than cash and cash equivalents in subsidiaries purchased or
disposed
2. Non-cash transactions in investing and financing activities such as:
- Acquisition of assets assuming directly related liabilities (e.g. loan)
- Leases
- Acquisition of an entity by an equity issue
- Conversion of debt to equity
3. Components of cash and cash equivalents.

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