Points to Remember
1. Cash flows arising from taxes on
income should be separately disclosed and should be classified as cash flows
from Operating Activities unless they can be specifically identified with
Financing and Investing Activities.
2. Cash flows associated with
extraordinary items should be classified as arising from operating, investing
or financing activities as appropriate and separately disclosed.
3. Cash flow from interest and dividends
received and paid should each be disclosed separately.
Some Special Items
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| Some Special Items |
Interest and Dividends
Interest
and dividends shall be classified as follows:
For a financing enterprise
Interest
paid and received, dividend received as operating activities.
Dividend
paid as financing activities.
For other enterprise
Interest
and dividends received as investing activities.
Interest
and dividends paid as financing activities.
Income Tax
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| Income Tax |
Cash
flows arising from taxes on income should be separately disclosed and should be
classified as cash flows from operating activities unless they can be
specifically identified with financing and investing activities.
Similarly,
tax refund should be treated as cash inflow from operating activities and to be
shown separately.
Non-Cash Transactions
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| Non-Cash Transaction |
Investing
and financing transactions that do not require the use of cash or cash
equivalents should be excluded from a cash flow statement. Such transactions
should be disclosed elsewhere in the financial statement in a way that provided
all the relevant information about these investing and financing activities.
Examples of non-cash transaction are:
(i)
purchase of assets by issue of shares;
(ii)
conversion of debentures into shares.
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