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

Narmada Infra Ltd reports under Ind AS and is not a financial entity. It received Rs 8 lakh as interest on fixed deposits and Rs 2 lakh as dividend from an equity investment. The accountant asks where these should appear in the Statement of Cash Flows, noting that earlier versions of its policy showed them in operating activities. Which presentation is correct?

Both the Rs 8 lakh interest and Rs 2 lakh dividend received are shown in investing activities, totalling Rs 10 lakh. Ind AS 7 does not give non-financial entities the IAS 7 option to treat them as operating cash flows.

  1. AOperating activities, Rs 10 lakh
  2. BFinancing activities, Rs 10 lakh
  3. CInvesting activities, Rs 10 lakhCorrect
  4. DInterest in investing, dividend in operating

Explanation

Ind AS 7 requires interest and dividends received to be classified as investing activity, with no operating option for non-financial entities (refer paragraph 33). Both items totalling Rs 10 lakh therefore go to investing. A mixed presentation or operating presentation reflects the IAS 7 option and is incorrect.

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