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

Kaveri Industries Ltd (a non-financial company, Ind AS) reports: profit before tax Rs 90 lakh; depreciation Rs 20 lakh; interest expense Rs 15 lakh (all paid in cash); interest income Rs 6 lakh (all received); dividend received Rs 4 lakh; increase in working capital Rs 10 lakh; income tax paid Rs 25 lakh. Profit before tax is after charging interest expense and crediting interest income and dividend income. Under Ind AS 7 (indirect method), what is net cash from operating activities and what is the interest/dividend treatment?

Net cash from operating activities is Rs 80 lakh. Profit before tax is adjusted by adding depreciation and interest expense and deducting interest and dividend income, because those go to financing and investing. After the working capital increase and tax paid, Rs 80 lakh remains.

  1. ARs 80 lakh; interest paid in financing and receipts in investing
  2. BRs 74 lakh; interest paid in financing and receipts in investingCorrect
  3. CRs 84 lakh; interest paid in financing and receipts in investing
  4. DRs 70 lakh; interest paid in operating and receipts in investing

Explanation

Start at PBT 90, add depreciation 20 and interest expense 15 (financing item), deduct interest income 6 and dividend 4 (investing items): 115. Less working capital increase 10 gives 105 cash generated. Less tax 25 gives 80... recheck: 90+20+15-6-4=115; 115-10=105; 105-25=80. The cash flow from operations is therefore Rs 80 lakh, so option A matches the data.

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