CA Varun Sethi ICAI Lectures - IFRS 1, IndAs 101, IAS 1, 7, 8, 10 & IndAS 1, 7, 8, 10

ICAI Certificate course on IFRS/IndAS
IFRS 1/ IndAS 101: Primer on First-time Adoption of Indian Accounting Standards
IAS 8/ IndAS 8: Accounting Policies, Changes in Accounting Estimates and Errors*
IAS 1/ IndAS 1: Presentation of Financial Statements
IAS 10/ IndAS 10: Events after the Reporting Period*
IAS 7/ IndAS 7: Statement of Cash Flows*
Presentation by : CA Varun Sethi
Contact no: 9899766487
Email: varunsethi81@gmail.com
*Presentation includes comparison of IAS 7 with IndAS 7 and AS 3
*Presentation includes comparison of IAS 8, IndAS 8, ICDS I and AS 5
*Presentation includes comparison of IAS 10, IndAS 10 and AS 4
and relevant references to CA, 2013, SEBI regulations, Updates from IASB projects

2015Presentation by : CA Varun Sethi
CA Varun Sethi
09899766487
The presentation covers requirements for
reporting ‘Statement of cash flows’ as part of
‘financial statements’ by businesses as
required under the
1. Indian Companies Act, 2013
2. Indian Accounting Standard Rules,
3. SEBI LDR Regulations,
For
1. Consolidated financial statements
2. Standalone financial statements
3. Interim/ Quarterly/Half yearly/YTD financial
statements
By
1. Listed Public Companies
2. Unlisted Companies (Public and Private
limited)
IAS 7/ IndAS 7: Statement of Cash Flows
Coverage &
Contents
Importance and practical uses of the standard
Applicability of IndAS 7/AS 3 to listed and unlisted companies for CFS/
SFS
1
2
Legal/ other requirements under the Indian financial reporting framework
governing preparation and presentation of Cash flow statement
3
Key definition and terms used in IAS 7/ IndAS 74
5 Presentation and disclosure of specific cash flows like
- FOREIGN currency cash flows
- interest and dividends paid and received
- Acquiring or losing control of investments in subsidiaries or JVs
- Bank overdrafts/ cash credit/ restricted cash
- Tax cash flows
- Derivatives related Cash Flows
6 Differences between IAS 7, IndAS 7 & AS 3

CA Varun Sethi
09899766487
InternationalAccounting Standards issued by IASB (InternationalAccounting Standards Board)IAS
Accounting Standards as specified in rule 3 of Companies (Accounting Standards) Rules, 2006AS*
Accounting Standards as specified in rule 3 the Companies (Indian Accounting Standards) Rules, 2015,
EFFECTIVE April 01, 2015
IndAS*
*The Accounting standards as specified in Annexure to the Companies (Accounting Standards) Rules, 2006 shall be the Accounting
Standards applicable to the companies other than the classes of companies specified in rule 4 of the Companies (Indian Accounting
Standards) Rules, 2015
- Separate Financial Statements
- Consolidated Financial Statements
SFS -
CFS -
Abbreviations
used
*Small and Medium Sized Company defined in Companies Act (AS) Rules 2006 as notified.SMC
Companies Act
SEBI Listing obligations & disclosure
CA, 1956/2013
SEBI LDR

Rapid Fire – Question and Answer series*
*Includes relevant requirements of regulators like SEBI or SEC / ICAI-FRRB/ QARC

IAS 7/ IndAS 7 : ExamplesQuestions and Answers Series
Q. Ind AS 7 – Non profit sector – Unrestricted Cash – NO Donor imposed restriction
What is the appropriate classification for:
Cash receipts resulting from the sale of donated financial assets (for example, donated debt or equity instruments) by NPOs that
upon receipt were directed without any NPO-imposed limitations for sale and were converted nearly immediately into cash shall be
classified as operating cash flows
A. Operating cash flows
1. Directly related proceeds of insurance settlements, such as the proceeds of insurance on a building
that is damaged or destroyed.
Cash flow classification:
INVESTING CF
1. Receipts from contributions and investment income that by donor stipulation are restricted for the
purposes of acquiring PPE, or other long-lived assets or
2. Establishing or increasing a permanent endowment or term endowment
FINANCING CF
3. Amounts received to settle lawsuits OPERATING CF
4. proceeds of insurance settlements except for those that are directly related to investing or financing
activities, such as from destruction of a building
OPERATING CF

IAS 8/ IndAS 8 : ExamplesQuestions and Answers: IPO
Eg. Ind AS 8 – Initial public offering restatement reporting requirements (SEC clarifications):
At times, a correction of an error pursuant to IAS 8 is required for an initial public offering (IPO) Form S-1 pre-effective amendment.
Discuss the SEC guidance in this respect.
A.
1. The SEC staff provided guidance that after initially disclosing an error correction in a pre-effective amendment, an entity is
required to continue to provide the restatement disclosures and labeling in subsequent Form S-1 amendments until the
registration statement is updated to include a new fiscal year’s annual financial statements.
2. This view applies equally to amendments to initial registration statements that are submitted confidentially under the JOBS Act,
which was enacted in April 2012.
Eg. Ind AS 8 – Initial public offering restatement reporting requirements:
1. A company files an IPO registration statement, including audited financial statements for the three years ended 31 December
2X15. The issuer identifies and corrects a material error in its 2X14 financial statements and files a pre-effective amendment,
which includes restated financial statements for 2X14 and accompanying disclosures.
2. To remove the restatement labeling and disclosure prior to effectiveness, the financial statements for the 12 months ending 31
December 2X16 would need to be filed in the IPO registration statement.

IAS 8/ IndAS 8 : ExamplesQuestions and Answers
Q. Ind AS 8 – How Should INDIRECT EFFECTS of a change in accounting policy be accounted for?
A. Any indirect effects would be recognized in the period of the accounting change and not in the prior period that is affected by the
retrospective application.
Q. Ind AS 8 – Retrospective application of AP
Ind AS 8 states - Changes in accounting policies is allowed IF it results in FS providing reliable & more relevant information
Comment on this.
o The method of accounting is changed for a tax or tax credit that is being discontinued?
A. The method of accounting shall NOT be changed for a tax or tax credit that is being discontinued.
Q. Ind AS 8 – Retrospective application of AP
Ind AS 8 states - Changes in accounting policies is allowed IF it results in FS providing reliable & more relevant information
o The method of transition elected at the time of adoption of a IndAS update is being subsequently changed?.
A. The method of transition elected at the time of adoption of a IndAS update shall NOT be subsequently changed. The issuance
of a IndAS update that requires use of a new accounting policy, interprets an existing policy, expresses a preference for an
accounting policy, or rejects a specific policy may require an entity to change an accounting policy. The issuance of such an update
constitutes sufficient support for making such a change.

IAS 8/ IndAS 8 : ExamplesQuestions and Answers Series
Q. Ind AS 8 – Reporting a Change in Accounting Policy Made in an Interim Period
How to report a Change in Accounting Policy Made in an Interim Period ?
A.
A. A change in accounting policy made in an interim period shall be reported by retrospective application. However, the
impracticability exception may not be applied to pre-change interim periods of the fiscal year in which the change is made.
B. When retrospective application to pre-change interim periods is impracticable, the desired change may only be made as of the
beginning of a subsequent fiscal year.

IAS 7/ IndAS 7: Statement of Cash Flows*

201510 Presentation by : CA Varun Sethi
IAS 7/ IndAS 7: Statement of Cash Flows (Para 4&5)
CA Varun Sethi
09899766487
1. IAS 7 reads: The amount of cash flows arising from operating activities is a key indicator of the extent to which the
operations of the entity have generated sufficient cash flows to repay loans, maintain the operating capability of the
entity….
However, E-Commerce companies are investing huge sums in digital advertising and IT infrastructure etc.? Their
operating cash flows aren’t commensurate with their requirements for cash burn. Is this of concern if any?
2. How does the cash flows of a start up company compare to cash flows of relatively resilient companies?
3. Why is it essential to carefully classify Cash flows between operating, investing and financial activities?
4. How does the Cash flow statement prepared using IAS 7/ IndAS 7 finally consumed/ used/ interpreted by the
investment and analyst community?
5. What is the relation between the Cash flow from operations (before Working capital changes) and EBITDA/ EBIT/
PAT?
Practical Uses
of the standard

IAS 7/ IndAS 7: Statement of Cash FlowsCA Varun Sethi
09899766487
IAS 7/ AS3/
IndAS 7
Cash Flow
Statement
requirements
CFS/ SFS
?
Public
Listed
entities
Public
Unlisted
entities?
SMC/
Private
Limited
Cos
Companie
s Act
Schedule
III
Interim
Financial
reports?
SEBI LDR
Rules?
2. Is Cash Flow Statement required for interim financial reports?
3. Is Cash Flow Statement required for Consolidated financial
statements?
4. Is Cash Flow Statement required for Quarterly/ Half yearly/ YTD
Consolidated financial statements?
5. Is Cash Flow Statement required for Quarterly/ Half yearly/ YTD
Standalone financial statements?
6. Is Cash Flow Statement required for reporting by Non profit
sector?
Applicability of
IndAS 7/AS 3
7. While Companies Act,2013 - SCHEDULE III prescribes the contents and format of balance sheet and income
statement, it does NOT prescribe any format for Cash flow statement
1. Does exemption from AS 3 under AS 2006 Rules apply to Small Company or to a SMC?

Standards in Annexure to these rules once required to be complied with, shall apply to both SFS
and CFS.
09899766487
The Companies
(IndAS)
Rules, 2015
Governing
requirements
1. The Companies Act 2013 defines the term financial statements to include balance sheet,
profit and loss and cash flow statement.
2. The cash flow statement is a first-time inclusion.
3. In the case of a One Person Company (OPC), small company and dormant company, the
cash flow statement is excluded.
Indian
Companies Act
2013
[Sec 2(40)]
Rule 10: Statement containing salient features of financial statements
In terms of Accounting Standard (AS)3, Cash Flow Statement, wherever required and
notified, the notes to the abridged financial statements shall contain a prescribed format of
abridged cash flow statement (FORM AOC-3)
The Companies
(Accounts) Rules,
2014
1. Clause 32 (read with Clause 41) of the (Equity) Listing Agreement mandates listed
Companies to publish its Consolidated Accounts and submit Annual report.
2. The Annual Report shall contain Cash Flow Statement prepared in accordance with the
Accounting Standard on Cash Flow Statement (AS-3) presented only under the Indirect
Method as given in AS-3.
SEBI LDR
Regulations
/ Listing
agreement

An entity that is a parent shall present consolidated financial statements.
09899766487
Ind AS 110:
Consolidated Financial
Statements
Separate financial statements shall be prepared in accordance with all applicable Ind AS.
1. Ind AS 1 defines a complete set of financial statements as including a statement of cash flows for the
period etc
2. An interim financial report shall include, at a minimum, the following components: a condensed
statement of cash flows; etc
3. Interim reports shall include interim financial statements (condensed or complete) for periods as
follows: statement of cash flows (etc) cumulatively for the current financial year to date, with a
comparative statement.
IndAS 34/
AS 25
: Interim Financial
Reporting
Governing
requirements
Ind AS 1 defines a complete set of financial statements as including a statement of cash flows for the
period etc.
IndAS 1
: Presentation of
Financial Statements
IndAS 27
:Separate Financial
Statements
This Accounting Standard is NOT mandatory for Small and Medium Sized Companies (SMC), as defined
in the Notification.
AS 3:
Statement of Cash
Flows
An entity shall prepare a statement of cash flows in accordance with the requirements of this Standard
and shall present it as an integral part of its financial statements for each period (i.e., annual period
as well as interim reporting period) for which financial statements are presented.
IAS 7/ IndAS 7
Statement of Cash
Flows

IAS 7/ IndAS 7: Statement of Cash FlowsIndian Financial reporting framework –
Statement of cash flows
ED - Accounting
Standard for Local
Bodies (ASLB) 2,
Cash Flow Statements
Local Bodies
AS3/ IndAS 7, Statement
of Cash Flow. Refer next
slide
Companies and other
reporting entities
NOT required to prepare
Statement of cash flows
Small Company/ OPC/
Dormant Companies
1. IndAS 7, Statement of
Cash Flow
2. They may opt to report
under IFRS (IAS 7 for
statement of cash
flows
Listed Public
Companies

09899766487
Applicability of
IndAS 7/AS 3
SEBI LDR
Qtrly/Half/YTD
CFS/SFS
Public Listed Entity
(NW>500 cr)
CA (Accounts)
Rules 2014
CA (IndAS)
Rules 2015
(Incl. IndAS 7)
Annual CFS
/SFS
CA (AS) Rules
2006
(Incl. AS 3)
Public unlisted*/
Pvt Ltd (NW>500 cr)
Private Limited entity
(NW<500 cr)
Private Limited entity
(NW>250 cr)
OPC, Small Co,
Dormant Co
Commercial/ reporting
enterprise being SMC*
YES YES YES For A/c periods after
Apr 1, 2006 and
before April 1, 2016
For A/c periods after
Apr 1, 2016 as per
roadmap
NO YES YES As per roadmapFrom Apr 1, 2016
as per roadmap
as per roadmap
as per roadmap
NO YES YES YES if Rev>50
Cr
NO
NO YES YES As per roadmapNO Cash Flow
requirement
*EXCLUDING
1. The insurance companies, banking companies and non-banking finance companies &
2. Companies whose securities are listed or are in the process of being listed on SME exchange or on the Institutional Trading Platform without initial public offering in
accordance with the provisions of Chapter XC of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

IAS 7/ IndAS 7: Statement of Cash Flows (Para 7 to 9)
CA Varun Sethi
09899766487
Cash
equivalents
Where bank overdrafts which are
repayable on demand form an
integral part of an entity's cash
management, bank overdrafts are
included as a component of cash
and cash equivalents
Bank borrowings
1. Bank deposits with more than 12
months to maturity as on BS
date should be treated as
OTHER noncurrent assets,
2. Cannot be shown as ‘other bank
balances’ in Cash & Bank bal.
Bank deposits > 12 months maturity
disclosed separately.
1. Shall be disclosed separately.
2. Cannot be included in Cash and
cash equivalents
3. Need to be disclosed under sub-
head “other bank balances”
under cash and bank balances
along with FDR having balance
maturity period of more than 12
months..
Balances with banks held as margin
money or security against borrowings,
guarantees, other commitments
1. These are always considered as part of current assets.
2. As per para 6Q of the General Instructions for Preparation of Balance Sheet a company shall
disclose the following in respect of cash and cash equivalents. :
1. Balances with banks & Cheques, drafts on hand; & Cash on hand;
2. Others (specify nature):- - Earmarked balances with banks (for eg, for unpaid dividend).
- Balances with banks held as margin money or security against the borrowings, guarantees, other
commitments to be disclosed separately
- Repatriation restrictions, if any, in respect of cash and bank balances shall be separately stated.
Schedule III, Cos
Act, 2013
Disclosure of
Cash and cash
equivalents (CCE)

(Updates from IASB : April 2015)
Updates from IASB: (April 2015)
: IAS 7 Disclosure initiative - IASB
To complement the work being done by the IASB in its Conceptual Framework for
Financial Reporting project, in 2013 the IASB started its Disclosure Initiative.
Disclosure
Initiative of IASB
The objectives of the Exposure Draft Disclosure Initiative (Proposed amendments to
IAS 7) are to improve:
1. (a) information provided to users of financial statements about an entity’s financing
activities, excluding equity items; and
2. disclosures that help users of financial statements to understand the liquidity of an
entity.
Objectives of the
Exposure Draft
The IASB developed the amendments in ED in response to requests from investors,
including those received at the Financial Reporting Disclosure Discussion Forum and
those included in the Feedback Statement which was issued in May 2013.
Reason for the
amendment

Components of financing activities
Para - 44A : An entity shall provide a reconciliation of the amounts in the opening and closing statements of
financial position for each item for which cash flows have been, or would be, classified as financing activities in
the statement of cash flows, excluding equity items. The reconciliation shall include:
1. Opening balances in the statement of financial position;
2. Movements in the period, including:
i. changes from financing cash flows;
ii. changes arising from obtaining or losing control of subsidiaries or other businesses; and
iii. other non-cash changes (for example, the effect of changes in foreign exchange rates, and changes in
fair values).
3. Closing balances in the statement of financial position.
Paragraph 44A is added to IAS 7

Illustration Disclosure
initiative – Amendments to
IAS 7.
Notes to the statement of
cash flows ---
Other Disclosures..
Para – 50A:
Additional information may be relevant to an understanding of the liquidity of an entity. An entity shall consider
matters such as restrictions that affect the decisions of an entity to use cash and cash equivalent balances,
including tax liabilities that would arise on the repatriation of foreign cash and cash equivalent balances. If
these, or similar, matters are relevant to an understanding of the liquidity of the entity, those matters shall be
disclosed.

09899766487
Cash
equivalents
Cash credit from bank, is a facility
on a continuing basis (though
contractually payable on demand on
violation of terms and conditions of
sanction) is considered as a part of
financing activities.
Cash credit
(Source: Educational Material on IndAS 7 - Cash Flow Statements)
1. These are always considered as part of current assets.
2. As per para 6Q of the General Instructions for Preparation of Balance Sheet a
company shall disclose the following in respect of cash and cash equivalents. :
1. Balances with banks & Cheques, drafts on hand;
2. Cash on hand;
3. Others (specify nature):-
- Earmarked balances with banks (for eg, for unpaid dividend).
- Balances with banks held as margin money or security against the borrowings,
guarantees, other commitments to be disclosed separately
- Repatriation restrictions, if any, in respect of cash and bank balances shall be
separately stated.
Schedule III, Cos Act, 2013
Disclosure of Cash and cash equivalents (CCE)

CA Varun Sethi
9899766487
Key definitions
Operating activities are the principal
revenue-producing activities of
the entity and other activities that
are not investing or financing
activities
Operating activities
1. Investing activities are the
acquisition and disposal of
long-term assets and other
investments not included in
cash equivalents.
2. Represent the extent to which
expenditures have been made
for resources intended to
generate future income and cash
flows
Investing activities
Financing activities are activities
that result in changes in the size
and composition of the contributed
equity and borrowings of the
entity
Financing activities
Cash equivalents are short-term, highly liquid investments that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value. an investment
normally qualifies as a cash equivalent only when it has a short maturity of, say, three months or less
from the date of acquisition.
(Note: The 3 months maturity period is to be determined from the date of deposit & not from end of the reporting period)
Cash
equivalents

09899766487
Examples
Inflows:
1. Cash receipts from the sale of
goods and the rendering of
services
Outflows:
1. Cash payments to suppliers for
goods and services
2. Cash payments to and on behalf
of employees
3. Cash payments or refunds of
income taxes unless they can be
specifically identified with
financing and investing activities;
Operating activities
1. Cash receipts/ payments to
sell/acquire PPE , intangibles
and other long-term assets.
2. Cash payments/ receipts to/ from
acquire/sales of equity or debt
instruments of other entities and
interests in joint ventures
3. Cash advances / and loans
made / receipts from repayments
to other parties
4. Cash payments for futures
contracts, forward contracts,
option & swap contracts
Investing activities
1. Cash proceeds from issuing
shares or other equity
instruments;
2. Cash payments to owners to
acquire or redeem the entity’s
shares;
3. Cash proceeds from issuing
debentures, loans, notes, bonds,
mortgages and other short-term
or long-term borrowings
4. Cash repayments of amounts
borrowed;
Financing activities

09899766487
Cash Flow from
operations
Major classes of gross cash
receipts and gross cash payments
are disclosed
The direct method
Profit or loss is adjusted for the
effects of transactions of a non-cash
nature, any deferrals or accruals of
past or future operating cash
receipts or payments, and items of
income or expense associated with
investing or financing cash flows.
The Indirect method
The statement of cash flows shall
report cash flows during the period
classified by
1. Operating,
2. Investing and
3. Financing activities.
Cash Flow statement
Presentation

CA Varun Sethi
09899766487
Foreign currency
cash flows
Cash flows arising from transactions
in a foreign currency shall be
recorded in an entity’s functional
currency by applying to the foreign
currency amount the exchange rate
between the functional currency and
the foreign currency at the date of
the cash flow.
CFs from TRANSACTIONS in foreign
currency.
1. A weighted average exchange
rate for a period may be used for
recording foreign currency
transactions or the translation of
the cash flows of a foreign
subsidiary.
2. Ind AS 21 DOES NOT permit
use of the exchange rate at the
end of the reporting period when
translating the cash flows of a
foreign subsidiary.
TRANSLATION* of CFs of a foreign
subsidiary.
1. Unrealized gains and losses
arising from changes in foreign
currency exchange rates are not
cash flows.
2. The effect of exch. rate changes
on cash & cash equivalents held
or due in a foreign currency is
reported in the statement of cash
flows in order to reconcile cash &
cash equivalents at the
beginning & the end of the
period.
3. This amount is presented
separately from cash flows from
operating, investing and
financing activities.
Unrealized gains and losses
*AS3 does NOT prescribe similar disclosure requirement. It is silent on this presentation

CA Varun Sethi
09899766487
Presentation and
disclosure of Interest
and dividends
1. Non Financial entity:
Interest and dividends received
should be classified as cash flows
from investing activities
2. Financial Institution:
Interest and dividends received in
the case of a financial institution
should be classified as cash flows
arising from operating activities.
Interest and dividends
RECEIVED
Interest paid (expensed or
capitalized) should be classified as
cash flows from financing activities.
Interest PAID in the case of a
financial institution should be
classified as cash flows arising from
operating activities
Interest
PAID
Dividends paid should be classified
as cash flows from financing
activities.
Dividends PAID in the case of a
financial institution should be
classified as cash flows arising from
operating activities
Dividends
PAID

CA Varun Sethi
09899766487
Taxes on income &
Investments made
1. Cash flows arising from taxes on
income shall be separately
disclosed and
2. Shall be classified as cash flows
from operating activities
2. UNLESS they can be specifically
identified with financing and
investing activities.
3. Eg. Tax payment by way of long-
term capital gain on sale of land,
tax payment on dividend recd.
Income tax cash flows
When accounting for an investment
in an associate, a joint venture or a
subsidiary accounted for by use of
the equity or cost method, an
investor restricts its reporting in the
statement of cash flows to the cash
flows between itself and the
investee, for example, to dividends
and advances.
Investments in subsidiaries,
associates and joint ventures
The aggregate cash flows arising
from obtaining or losing control of
subsidiaries or other businesses
1. shall be presented separately
2. And classified as investing
activities
Obtaining or losing control of
subsidiaries

IAS 7/ IndAS 7: Statement of Cash Flows (Para 39 to 42B)
Changes in ownership interests in
subsidiaries and other businesses*
The aggregate cash flows arising
from obtaining or losing control of
subsidiaries or other businesses
1. shall be presented separately
2. And classified as investing
activities.
The cash flow effects of losing
control are NOT deducted from
those of obtaining control.
Cash flows arising from obtaining or
losing control
Cash flows arising from changes in
ownership interests in a subsidiary
that DO NOT result in a loss of
control shall be classified as cash
flows from financing activities,
unless the subsidiary is held by an
investment entity, as defined in Ind
AS 110,
Change of interest DO NOT result in a
loss of control
The aggregate amount of the cash
paid or received as consideration
for obtaining or losing control of
subsidiaries or other businesses is
reported in the statement of cash
flows net of cash and cash
equivalents acquired or disposed of
as part of such transactions.
Obtaining or losing control of
subsidiaries
*AS3 does not prescribe similar disclosure requirement. It is silent on this presentation

09899766487
Derivatives related
Cash Flows
• Classified as cash flows arising from
investing activities when Cash payments
for future & forward contracts, option & swap
contracts except when the contracts are held
for dealing or trading purposes, are classified
as financing activities
1. When a contract is accounted for as a hedge of an identifiable
position the cash flows of the contract are classified in the
same manner as the cash flows of the position being hedged.
2. When such a contract is accounted for as a hedge, cash flows
arising from hedging instruments are classified as operating,
investing or financing activities, on the basis of the
classification of the cash flows arising from the hedged item.
Example: when a forward contract is taken for repayment of a
foreign currency loan and hedge accounting is followed, cash
payments and receipts of the aforesaid forward contract is
classified as financing activities.
Classification of cash receipts and payments from Derivatives like future & forward contracts,
option & swap contracts?
• Classified as cash flows arising from
investing activities when cash receipts from
future & forward contracts, option & swap
contracts except when the contracts are held
for trading purposes, or the receipts are
classified as financing activities.

IAS 7/ IndAS 7: Statement of Cash Flows (Para 39 to 42B)Non-cash transactions
Investing and financing transactions
that do not require the use of cash
or cash equivalents shall be
excluded from a statement of cash
flows.
Non-cash transactions:
Presentation
1. The acquisition of an entity by
means of an equity issue;
2. The conversion of debt to equity
3. The acquisition of assets either
by means of a finance lease;
4. acquisition of an enterprise by
means of issue of equity shares
Non-cash transactions
(Examples)

09899766487
Miscellaneous
disclosures
An entity shall present a
reconciliation of the amounts in its
statement of cash flows with the
equivalent items reported in the
balance sheet.
Reconciliation of CCE to BS face
number
An entity shall disclose, together
with a commentary by
management, the amount of
significant cash and cash equivalent
balances held by the entity that are
NOT available for use by the group.
CCE NOT available for use by the
group
1. The amount of undrawn borrowing facilities that may be available for future operating
activities and to settle capital commitments,
2. Including Indicating any restrictions on the use of these facilities;
Disclosure of
Undrawn
borrowing facilities
The amount of the cash flows
arising from the operating, investing
and financing activities of each
reportable segment.
CFs for reportable segment

09899766487
Key definitions
The installment paid in respect of an
item of Property, Plant and
Equipment acquired on deferred
payment basis includes interest,
1. the interest element is
classified under financing
activities and
2. the loan element is classified
under investing activities
EMI - deferred payment basis
Financing cash Flows
1. Cash payments by a lessee for
the reduction of the outstanding
liability relating to a finance lease
2. Cash proceeds from mortgages
MLP in a Finance Lease
1. Ind AS 7 specifically requires
adjustment of the profit or loss
for the effects of ‘undistributed
profits of associates and non-
controlling interests’ while
determining the net cash flow
from operating activities using
the indirect method.
2. AS 3 is silent
Share of undistributed profits

09899766487
IAS 7 Vs
IndAS7
In case of other than financial entities, IAS 7 gives an
OPTION to classify the interest paid and interest and
dividends received as item of operating cash flows.
IAS 7 :
Interest paid
and interest
and dividends
received
Interest and dividends received should be classified as
cash flows from investing activities
Interest paid (expensed or capitalized) should be
classified as cash flows from financing activities.
IndAS 7:
interest paid
and interest and
dividends
received
1. IAS 7 gives an option to classify
the dividend paid as an item of
operating activity.
2. However, Ind AS 7 requires it to
be classified as a part of
financing activity only
IAS 7 Vs IndAS 7:
Dividends Paid

09899766487
IAS 7 Vs AS3
• Ind AS 7 specifically includes bank overdrafts which
are repayable on demand as a part of cash and cash
equivalents,
• The existing AS 3 is silent on this aspect
Bank
overdrafts
repayable on
demand
1. The existing AS 3 requires cash flows associated with
extraordinary activities to be separately classified as
arising from operating, investing and financing
activities,
2. Ind AS 7 does NOT contain this requirement
consistent with IndAS 1.
Cash flows
from
extraordinary
activities
Ind AS 7 specifically requires
adjustment of the profit or loss for
the effects of ‘undistributed
profits of associates and non-
controlling interests’ while
determining the net cash flow from
operating activities using the
indirect method.
AS 3 is silent
Share of undistributed profits

09899766487
Other matters
• An overriding test is that cash equivalents are held to meet short-term cash requirements of the entity rather than
for investment or other purposes.
• For example, a three month loan or deposit given to a party to help in managing party’s short-term liquidity position is not a cash
equivalent because it is given for a purpose other than to manage its own short-term cash requirements.
• In view of variety of cash management practices and banking arrangements, an entity is required to disclose the
policy which it adopts in determining the composition of cash and cash equivalents.
CCE
(Source: Educational Material on IndAS 7 - Cash Flow Statements)

CA Varun Sethi ICAI Lectures - IFRS 1, IndAs 101, IAS 1, 7, 8, 10 & IndAS 1, 7, 8, 10

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