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Statement of cash flows
Statement of cash flows
Statement of cash flows
Statement of cash flows
Statement of cash flows
Statement of cash flows
Statement of cash flows
Statement of cash flows
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Statement of cash flows

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A short discussion on IAS 7 Statement of cash flows for Unisa students (FAC4862 and FAC4864)

A short discussion on IAS 7 Statement of cash flows for Unisa students (FAC4862 and FAC4864)

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  • 1. CASH FLOWSTATEMENTSFAC 4862 & FAC 4864Department of Financial Accounting
  • 2. CASH FLOW STATEMENTSCash flows are classified by : Operating activities Revenue producing activities Acquisitions and disposals of Investing activities long-term assets Change in size or composition of Financing activities equity or borrowings Interest received and dividends Interest paid and dividends paid received FINANCINGACTIVITY or INVESTING ACTIVITY or OPERATING ACTIVITY OPERATING ACTIVITY
  • 3. CONSOLIDATED CASH FLOW STATEMENTSUse theCONSOLIDATED P/L and CONSOLIDATED SFPThe following issues are unique to CONSOLIDATEDstatement of cash flow:•Dividends received from associates and joint ventures•Acquisitions and disposals of associates and jointventures•Dividends paid to non-controlling shareholders•Acquisition and disposal of subsidiaries•Share issues and share buy backs by subsidiaries•Foreign operations
  • 4. CONSOLIDATED CASH FLOWSTATEMENTSINVESTMENT in Associate or JV:Cash paid for the investment = Investing activityTOTAL DISPOSAL of Associate or JV:Proceeds from disposal of investment = Investing activityEliminate gain/loss from operating activitiesPART DISPOSAL of Associate or JV (significant control/joint control isLOST):Proceeds from disposal of investment = Investing activityEliminate gain/loss from operating activitiesPART DISPOSAL of Associate or JV (still has significant control/jointcontrol):Proceeds from disposal of investment = Investing activityEliminate gain/loss from operating activitiesEliminate fair value adjustment of remaining investment from operatingactivities NB! Calculate dividendsDIVIDENDS received from Associate or JV: received by analysing theDisclose as operating or investing activity Investment in ASS/JV account in SFP
  • 5. CONSOLIDATED CASH FLOWSTATEMENTSInterest in subsidiary remains UNCHANGED(nothing new, only watch out for dividends from subs)ACQUISITION of subsidiaryInvestment in sub = Investing activity (net of cash acquired)Eliminate increase in assets and liabilities relating to the acquisition DEBTORSOpening balance (excl sub) 70 Closing balance (inclsub) 100Debtors of sub acquired 10 Cash receipts30Sales (parent + sub from a. date) 50 130 130Acquiring ADDITIONAL interest = Financing activityNB! Consideration paid by issuing shares:Only the sub’s cash is reported as an investing activity in the consolidatedstatement of cash flow
  • 6. CONSOLIDATED CASH FLOW STATEMENTSDISPOSAL of subsidiaryDisposal of sub = Investing activity (net of cash of subsidiary)Eliminate decrease in assets and liabilities relating to the acquisition DEBTORSOpening balance (incl sub) 80 Closing balance (excl sub)90Sales (parent + sub up to d.date) 50 Disposal of sub 10 Cash receipts 30 130 130PART DISPOSAL of subsidiary (control is not lost) = FINANCING activity
  • 7. CONSOLIDATED CASH FLOWSTATEMENTS Notes of the acquisition or disposal of a subsidiary to the statement of cash flow ACQUISITION OF SUB DISPOSAL OF SUBDuring the year the group acquired an Note:80% interest in Subsidiary X. The FV of During the year the group disposed ofnet assets acquired were as follows: an 80% interest in Subsidiary X. The FV of net assets disposed of were asPPE 280 follows:Debtors 10Cash 100 PPE 280Creditors (90) Debtors 10Net assets acquired 300 Cash 100NCI (300 X 20%) (60) Creditors (90)Goodwill (400+60 -300) Net assets disposed of 300160 NCI (300 X 20%) (60)Total consideration 400 Proceeds Goodwill (400+60 -300) 420Less cash of subsidiary Share of Net assets 160(10) (240) Gain on disposal 20Net cash inflow 390 Goodwill (160) Gain Total proceeds 20 420 Less cash of subsidiary (10)
  • 8. CONSOLIDATED CASH FLOWSTATEMENTS OTHER MATTERSDIVIDENDS PAID BY SUBSIDIARY:Dividends paid by subsidiaries to non-controlling shareholders should beincluded in the consolidated statement of cash flows. Non- controlling interestClosing balance 600 Opening balance 500Dividends declared 15 Interest in total comprehensiveincome 115(balancing) 615 615DISCONTINUED OPERATIONS (not for FAC 4862):Disclosure of net cash flows of discontinued operations in the notes of face ofstatement of cash flowsFOREIGN OPERATIONS (not for FAC 4862):Cash flow items: Translate at exchange rate date of transactionP/L items: Translate average exchange rate

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