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

Mehta Engineering Ltd, a non-financial entity, reports these cash items for the year: interest paid on term loans Rs 2,40,000; dividend paid to shareholders Rs 3,00,000; interest received on deposits Rs 90,000; dividend received on investments Rs 50,000. Under Ind AS 7, what is the total cash outflow from these items to be shown under financing activities?

The financing outflow is Rs 5,40,000, being interest paid of Rs 2,40,000 plus dividend paid of Rs 3,00,000. Ind AS 7 classifies both as financing, while interest and dividends received go to investing activities and must not be netted against these payments.

  1. ARs 5,40,000Correct
  2. BRs 3,00,000
  3. CRs 4,50,000
  4. DRs 4,90,000

Explanation

Interest paid (Rs 2,40,000) and dividend paid (Rs 3,00,000) are both financing items, giving Rs 5,40,000. Interest and dividends received (Rs 1,40,000) are investing inflows and are not netted against financing. Rs 4,50,000 wrongly deducts interest received, and Rs 4,90,000 wrongly deducts dividend received.

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