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CA Final · Financial Reporting · Ind AS 7 Statement of Cash Flows

A reviewer of Meghdoot Pharma Ltd's draft Ind AS cash flow statement observes that interest received of Rs 5 lakh on bank deposits has been included in cash flows from operating activities, because the prior-year IFRS reporting package allowed this choice for non-financial entities. What is the correct conclusion under Ind AS 7?

Interest received by a non-financial entity must be classified under investing activities in Ind AS 7. The IAS 7 option to treat it as operating has not been included, and no materiality threshold permits operating classification, so the reviewer's observation is right.

  1. ACorrect, as the choice exists for entities other than financial entities
  2. BIncorrect, it must be shown under financing activities as a negative item
  3. CIncorrect, it must be shown under investing activitiesCorrect
  4. DCorrect, provided the amount is below 10% of operating cash flows

Explanation

For entities other than financial entities, IAS 7 allows interest received as operating. Ind AS 7 gives no such option and requires interest received to be classified as an investing activity. No materiality threshold changes this.

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