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

Sagar Pharma Ltd, an Ind AS reporter and not a financial entity, has the following cash items for the year: cash generated from operations before interest Rs 180 lakh, income tax paid Rs 30 lakh, interest paid on borrowings Rs 22 lakh, interest received Rs 5 lakh, dividend received Rs 3 lakh, dividend paid Rs 15 lakh, and purchase of equipment Rs 60 lakh. Applying Ind AS 7 classification, what are the net cash flows from financing activities, ignoring any other items?

Net financing cash flow is an outflow of Rs 37 lakh, being interest paid of Rs 22 lakh plus dividend paid of Rs 15 lakh. Both are financing items under Ind AS 7, while interest and dividends received are investing items and are excluded.

  1. ARs (22) lakh
  2. BRs (37) lakhCorrect
  3. CRs (34) lakh
  4. DRs (15) lakh

Explanation

Under Ind AS 7, interest paid (Rs 22 lakh) and dividend paid (Rs 15 lakh) are both financing outflows, giving Rs (37) lakh. Interest and dividends received are investing inflows, so they are excluded. Rs (34) lakh wrongly nets the Rs 3 lakh dividend received, and Rs (22) lakh omits the dividend paid.

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