Cash Flows

Question 1

Bond premium amortization on long term debt - how is this shown in the operating activities section using the indirect method?

Answer 1

Deduction from net income

Question 2

Bond discount amortization on long term debt - how is this shown in the operating activities section using the indirect method?

Answer 2

Addition to net income

Question 3

Premium or Discount amortization tip

Answer 3

DA - DISCOUNT ADD

PD - PREMIUM DEDUCT

Question 4

Cash paid for interest in bonds is reported in

Answer 4

Operating activities

Question 5

Interest received and paid

Answer 5

Always operating activities

whether they are related to AVS, trading or HTM

Question 6

Dividends received and paid

Answer 6

RECEIVED - operating

PAID - financing

Question 7

Long term debt - bonds issued by entity

issuance and retirement

Answer 7

financing

Question 8

Loans made by entity to others

disbursement and collection proceeds

Answer 8

Investing

interest received i operating

Question 9

Acquisition and disposal of AVS

Answer 9

investing

Question 10

Acquisition and disposal of trading securities

Answer 10

operating

Question 11

Acquisition and disposal of PPE and intangibles

Answer 11

investing

Question 12

Cash outflow and inflow related to Notes Receivable

Answer 12

investing

Question 13

All borrowings and repayment of loans

Loans payable

Answer 13

financing

Question 14

All Notes payable transactions

Answer 14

financing

Question 15

Financing

Answer 15

issuance/payment on retirement of bonds
issuance/reacquisition of treasury stocks
issuance of shares of stocks
borrowing/repayment of loan
loan payable
notes payable
DIVIDENDS PAID

Question 16

Investing

Answer 16

LIP - loans, investments, PPE 
loans granted to others - investment
AVS 
intangibles
Notes receivables

Question 17

Operating

Answer 17

sales, purchases
all interests received and paid
dividends - received only
trading securities
income taxes

Question 18

Indirect method - operating activities

Answer 18

Net Income
Add/Deduct non cash items in IS
Premium amort - deduct
Discount amort - add
Increase/Decrease in AR, AP, inventory, allowance for BD, interest payable, tax payable, deferred tax liabitlity, prepaid expenses

Question 19

Direct method - operating activities

Answer 19

Cash collection from sales
Cash paid for purchases
cash paid for expenses 
cash paid/received for interest
cash paid/received for taxes
cash paid/received for trading securities transactions

Question 20

Is cash flow per share disclosed in the Income Statement?

Answer 20

NO

Question 21

SUPPLEMENTAL DISCLOSURES - direct method

Answer 21

• schedule to reconcile net income to cash flow provided/used by operations

*schedule of non cash financing and investing activities
*transactions without effect on cash:
- conversion of bonds to stock
- purchased financed entirely by loan (no actual
cash received or paid)

Question 22

SUPPLEMENTAL DISCLOSURES - indirect method

Answer 22

1. all cash payments for interest and income
   taxes
2. schedule of non cash investing and financing
   activities

Question 23

IFRS cash flows

Answer 23

1. direct or indirect method ok
2. Indirect method - use modified indirect method
   format differs from GAAP - all revenues and
   expenses in one group then total; under
   that are the changes in working capital
   accounts
3. Bottom whould show a reconciliation of the
   cash flows amount VS amounts in the
   statement of financial position
4. interests and dividends received - are
   OPERATING OR INVESTING
5. interest and dividends paid - are OPERATING
   AND FINANCING
6. ok to choose but should be consistent
7. income taxes paid - disclosed separately in
   operating activities
8. cash flows from other taxes - depends in the
   transaction they are related to
9. non cash activities - DISCLOSE IN THE NOTES
10. if direct method is used -NO RECONCILIATION
    at the bottom required - this is only shown
    in the NOTES TO FS

Question 24

In IFRS, interest and dividends received are reported in

Answer 24

OPERATING OR INVESTING

Question 25

In IFRS, interest and dividends paid are reported in

Answer 25

OPERATING OR FINANCING

Question 26

IFRS notes to financial statements should include:

Answer 26

Related to cash flows: 1. Statement reconciling net income to cash flow 2. Significant non cash activities for cash flows Other disclosures: 3. Information about the basis of preparation of FS and policies used 4. info required by IFRS that is not presented elsewhere in the FS 5. additional info not presented elsewhere but relevant to the understanding of the FS

Question 27

IFRS format review page 25-15

Answer 27

practice

Question 28

IFRS - bank overdraft cash advance

Answer 28

operating activities