Chapter 6: Statement of cash flows
19.4 Set out below are the financial statements of Emma, a limited liability company. You have
been asked to prepare the company's statement of cash flows, implementing IAS 7 Statement
of cash flows.
STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 20X2
$’000
Sales revenue 2,553
Cost of sales 1,814
Gross profit 739
Distribution costs 125
Administrative expenses 264
Operating profit 350
Interest received 25
Interest paid 75
Profit before tax 300
Income tax expense 240
Profit for the year 60
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EMMA STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER
20X2 20X1
$’000 $’000
Non-current assets
Tangible assets 380 305
Intangible assets 250 200
Investments - 25
630 530
Current assets
Inventories 150 102
Receivables 390 315
Short-tern investments 50 -
Cash in hand 2 1
592 418
1222 948
Equity and liabilities
Share capital ($1 ordinary shares) 200 150
Share premium account 160 150
Revaluation surplus 100 91
Retained earnings 160 100
620 491
Non-current liabilities
Long-term loan 100 -
Current liabilities
Trade payables 127 119
Bank overdraft 85 98
Taxation 290 240
502 457
1,222 949
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 current asset investments fall within the definition of cash equivalents under IAS 7.
(d) The following information relates to property, plant and equipment.
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31.12.20X2 31.12.20X1
$’000 $’000
Cost 720 595
Accumulated depreciation 340 290
Carrying amount 380 305
(e) 50,000 $1 ordinary shares were issued during the year at a premium of 20c per share.
Required
Prepare a statement of cash flows for the year to 31 December 20X2 using indirect method.
19.5 The following information is available for Sioux, a limited liability company:
20X4 20X3
$’000 $’000 $’000 $’000
Non-current assets
Cost or valuation 11,000 8,000
Accumulated depreciation (5,600) (4,800)
Carrying amount 5,400 3,200
Current assets
Inventories 3,400 3,800
Receivables 3,800 2,900
Cash at bank 400 7,600 100 6,800
13,000 10,000
Non-current liabilities 1,000 1,000
10% Loan notes 1,500 1,000
3,100 5,600 2,200 4,200
Current liabilities
Trade payables 3,700 3,200
Income tax 700 4,400 600 3,800
13,000 10,000
Summarised statement of profit or loss for the year ended 31 December 20X4
$’000
Profit from operations 2,650
Finance cost (loan note interest) (300)
2,350
Income tax expense (700)
Net profit for the year 1,650
Notes
1 During the year non-current assets which had cost $800,000, with a carrying amount of
$350,000, were sold for $500,000.
2 The revaluation surplus arose from the revaluation of some land that was not being
depreciated.
3 The 20X3 income tax liability was settled at the amount provided for at 31 December
20X3.
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4 The additional loan notes were issued on 1 January 20X4. Interest was paid on 30 June
20X4 and 31 December 20X4.
5 Dividends paid during the year amounted to $750,000.
Required
Prepare the company's statement of cash flows for the year ended 31 December 20X4, using
the indirect method, adopting the format in IAS 7 Statement of cash flows.
19.6 The following information has been extracted from the draft financial statements of
Snowdrop, a limited liability company.
SNOWDROP STATEMENTS OF FINANCIAL POSITION AS AT 31 MAY
20X4 20X5
$’000 $’000 $’000 $’000
Non-current assets 4,600 2,700
Current assets
Inventory 580 500
Trade receivables 360 230
Bank 0 170
940 900
Total assets 5,540 3,600
Equity and liabilities
Equity 3,500 2,730
Ordinary share capital 300 150
Share premium 1,052 470
Retained earnings 4,852 2,990
Non-current liabilities
10% Loan note
(redeemable 31 May 20X5) 0 100
Current liabilities
Trade payables 450 365
Taxation 180 145
Bank overdraff 58 0
688 510
5,540 3,600
Additional information
(a) The statement of profit or loss for the year ended 31 May 20X5 shows the following.
$'000
Operating profit 1,042
Interest payable (10)
Profit before taxation 1,032
Taxation (180)
Profit for financial year 852
(b) During the year dividends paid were $270,000.
(c) Profit before taxation had been arrived at after charging $700,000 for depreciation on
non-current assets.
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(d) During the year non-current assets with a net book value of $200,000 were sold for
$180,000.
Required
Prepare a statement of cash flows for Snowdrop for the year ended 31 May 20X5 in accordance
with IAS 7 Statement of cash flows, using the indirect method.
19.7 Geofost is preparing its statement of cash flows for the year ended 31 October 20X7. You
have been presented with the following information.
STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X7
$'000
Profit from operations 15,730
Finance cost (730)
Profit before tax 15,000
Taxation (4,350)
Profit for the year 10,650
STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER
20X7 20X6
$'000 $'000 $'000 $'000
Non-current assets 44,282 26,574
Current assets
Inventory 3,560 9,635
Trade receivables 6,405 4,542
Cash 559 1,063
10,524 15,240
Total assets 54,806 41,814
Equity and liabilities
Equity
Ordinary share capital 16,000 15,000
Share premium account 3,365 2,496
Retained earnings 15,629 6,465
34,994 23,961
Non-current liabilities
9% loan notes 8,000 10,300
Current liabilities
Bank overdraft 1,230 429
Trade payables 7,442 4,264
Interest payable 120 100
Taxation 3,020 2,760
11,812 7,553
Total equity and liabilities 54,806 41,814
Additional information
(a) During the year dividends paid were $1,486,000.
Summary schedule of changes to non-current assets during 20X7.
Accumulated Carrying
Cost depreciation value
$'000 $'000 $'000
Balance b/f 33,218 6,644 26,574
Additions 24,340 24,340
Disposals (2,964) (990) (1,974)
Depreciation 4,658 (4,658)
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Balance c/f 54,594 10,312 44,282
(c) The total proceeds from the disposal of non-current assets were $2,694,000.
Required
Prepare a statement of cash flows for Geofost for the year ended 31 October 20X7 in
accordance with IAS 7 Statement of cash flows, using the indirect method.
