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

Kaveri Engineering Ltd follows Ind AS and is not a financial entity. Its finance team proposes to present dividend paid to equity shareholders of Rs 20 lakh within operating activities, citing the option available in IAS 7. Which statement is correct for Kaveri's Ind AS financial statements?

Dividend paid must be classified only as a financing activity under Ind AS 7. The option in IAS 7 to show it as an operating item has been removed in Ind AS 7, so a policy disclosure or profitability cannot justify operating classification.

  1. AThe proposal is acceptable only if disclosed in the accounting policy
  2. BThe dividend paid must be shown only as a financing activityCorrect
  3. CThe dividend paid may be shown in investing activities
  4. DThe dividend paid may be shown in operating activities if the company is profitable

Explanation

IAS 7 permits dividend paid to be classified as operating, but Ind AS 7 requires it to be classified as part of financing activity only. Disclosure of a policy does not create an option that the standard removes. So the proposal fails.

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