Skip to content

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

Sundaram Foods Ltd, an Indian manufacturer, is comparing its Ind AS cash flow statement with its overseas parent's IAS 7 statement. The parent shows interest paid and interest and dividends received within operating activities. How must Sundaram Foods classify these items under Ind AS 7?

Interest paid goes to financing activities, and interest and dividends received go to investing activities. Ind AS 7 removes the IAS 7 option to treat them as operating items for entities other than financial entities, so the parent's presentation cannot be followed.

  1. AInterest paid as operating; interest and dividends received as investing
  2. BInterest paid as financing; interest and dividends received as investingCorrect
  3. CInterest paid as financing; interest and dividends received as operating
  4. DAll three items as operating, to match the group policy

Explanation

For entities other than financial entities, IAS 7 gives an option to treat these as operating items. Ind AS 7 gives no such option and requires interest paid in financing and interest and dividends received in investing. Group policy cannot override this requirement.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 7 Statement of Cash Flows shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 7 Statement of Cash FlowsFree diagnostic mock

More Ind AS 7 Statement of Cash Flows questions