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

Narmada Infra Ltd, a non-financial entity, reports cash from operations of ₹500 lakh. It paid interest of ₹60 lakh, received interest of ₹15 lakh and dividend of ₹10 lakh, and paid dividend of ₹90 lakh. Income taxes paid were ₹70 lakh with no specific investing or financing link. It spent ₹300 lakh on equipment purchases and repaid borrowings of ₹100 lakh. Applying Ind AS 7 classification, what are net cash flows from operating, investing and financing activities respectively?

Operating cash flow is ₹430 lakh, investing is an outflow of ₹275 lakh and financing is an outflow of ₹250 lakh. Ind AS 7 places interest and dividends received in investing, and interest and dividend paid in financing, while taxes reduce operating cash.

  1. A₹430 lakh; (₹275 lakh); (₹250 lakh)Correct
  2. B₹430 lakh; (₹275 lakh); (₹190 lakh)
  3. C₹395 lakh; (₹300 lakh); (₹100 lakh)
  4. D₹430 lakh; (₹300 lakh); (₹190 lakh)

Explanation

Operating = 500 - 70 tax = ₹430 lakh. Investing = -300 + 15 interest received + 10 dividend received = -₹275 lakh. Financing = -100 repayment - 60 interest paid - 90 dividend paid = -₹250 lakh. The second option wrongly leaves out the interest paid, treating it as operating or ignoring it.

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