IAS 7 - Cash Flow Statements

Cash and cash equivalents are: Short term (3 months or less). Highly liquid. Readily convertible to known amounts of cash; and Subject to insignificant risk of changes in value. Components 1. Operating Activities 2. Investing Activities 3. Financing Activities Issues Non cash investing and financing activities must be disclosed separately. Cash flows must be reported GROSS. Set-off is only permitted in very limited cases, and additional disclosures are required. FX transactions should be recorded at the rate at the date of the cash flow. Acquisition and disposal of subsidiaries are investment activities and specific additional disclosures are required. Where the equity method is used for joint ventures and associates, the cash flow statement should only show cash flows between the investor and investee. Where a joint venture is proportionately consolidated, the venturer should only include its proportionate share of the cash flows of the joint venture. Disclose cash not available for use by the group. Assets and liabilities denominated in a foreign currency generally include an element of unrealized exchange difference at the reporting date. Disclose the components of cash and cash equivalents and provide a reconciliation back to the Statement of Financial Position amount if required. Non-cash Investing and Financing transactions are NOT to be disclosed in the Statement of Cash Flows. Disclosures Components of cash and cash equivalents A reconciliation of the amounts in its statement of cash flows with the equivalent items reported in the SOFP The amount of significant cash and cash equivalent balances held by an entity that are not available for use by the group.

Operating Activities These are the main revenue producing activities of the entity AND other activities that are not investing or financing activities (including Taxes Paid/Received, UNLESS clearly attributable to Investing or Financing activities). Investing Activities These relate to the acquisition and disposal of long-term assets and other investments that are not considered to be cash equivalents. Financing Activities These relate to the activities that cause changes to the contributed equity and borrowings of the entity. Interest and dividends received/paid may be classified as operating, investing or financing, based on their nature and as long as they are consistently treated from period to period. Direct Method (Preferred method): Cash received from customers. Cash paid to suppliers. Cash paid to employees. Cash paid for operating expenses. Interest paid. Taxes paid. Dividends paid. Net cash from operating activities. The acquired assets and liabilities are required to be measured at their acquisition-date fair values.

Indirect Method: Start with net profit per SOCI Add back non-cash expenses (eg. depreciation) Adjust for gains(-)/losses(+) on sale of assets Account for changes in non-cash accounts Account for changes in all currents assets and liabilities except those still payable

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