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Chapter 23: Q1IFRS (page 1399)
Where can authoritative IFRS related to the statement of cash flows be found?
The authoritative IFRS relating to the statement of cash flows can be found in IAS 7.
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The following data are taken from the records of Alee Company
December 31, December 31,
2017 2016
Cash \( 15,000 \) 8,000
Current assets other than cash 85,000 60,000
Long-term debt investments 10,000 53,000
Plant assets 335,000 215,000
\(445,000 \)336,000
December 31, December 31,
2017 2016
Accumulated depreciation \( 20,000 \) 40,000
Current liabilities 40,000 22,000
Bonds payable 75,000 鈥�0鈥�
Common stock 254,000 254,000
Retained earnings 56,000 20,000
\(445,000 \)336,000
Additional information:
1. Held-to-maturity securities carried at a cost of \(43,000 on December 31, 2016, were sold in 2017 for \)34,000. The loss (not unusual) was incorrectly charged directly to Retained Earnings.
2. Plant assets that cost \(50,000 and were 80% depreciated were sold during 2017 for \)8,000. The loss was incorrectly charged directly to Retained Earnings.
3. Net income as reported on the income statement for the year was \(57,000.
4. Dividends paid amounted to \)10,000.
5. Depreciation charged for the year was $20,000.
Instructions
Prepare a statement of cash flows for the year 2017 using the indirect method
(Schedule of Net Cash Flow from Operating Activities鈥擨ndirect Method)
Ballard Co. reported \(145,000 of net income for 2017. The accountant, in preparing the statement of cash flows, noted the following items occurring during 2017 that might affect cash flows from the operating activities.
Instructions
Prepare a schedule that shows the net cash flow from operating activities using the indirect method. Assume no items other than those listed above affected the computation of 2017 net cash flow from operating activities.
Accounting, Analysis, and Principles The income statement for the year ended December 31, 2017, for Laskowski Manufacturing Company contains the following condensed information.
LASKOWSKI CO. INCOME STATEMENT | |
Revenues | \(6,583,000 |
Operating expenses (excluding depreciation) \)4,920,000 | |
Depreciation expense 880,000 | 5,800,000 |
Income before income tax | 783,000 |
Income tax expense | 353,000 |
Net income | \( 430,000 |
Included in operating expenses is a \)24,000 loss resulting from the sale of machinery for \(270,000 cash. The company purchased machinery at the cost of \)750,000.
Laskowski reports the following balances on its comparative balance sheets on December 31.
LASKOWSKI CO. COMPARATIVE BALANCE SHEETS (PARTIAL) | ||
2017 | 2016 | |
Cash | \(672,000 | \)130,000 |
Accounts receivable | 775,000 | 610,000 |
Inventory | 834,000 | 867,000 |
Accounts payable | 521,000 | 501,000 |
Income tax expense of \(353,000 represents the amount paid in 2017. Dividends declared and paid in 2017 totalled \)200,000.
Accounting
Prepare the statement of cash flows using the indirect method.
Analysis
Laskowski has an aggressive growth plan, which will require significant investments in plant and equipment over the next several years. Preliminary plans call for an investment of over $500,000 in the next year. Compute Laskowski鈥檚 free cash flow (from Chapter 5) and use it to evaluate the investment plans with the use of only internally generated funds.
Principles
How does the statement of cash flows contribute to achieving the objective of financial reporting?
For purposes of the statement of cash flows, under IFRS interest paid is treated as:
Question: (Worksheet Preparation) Below is the comparative balance sheet for Stevie Wonder Corporation.
Particulars | Dec 31, 2017 | Dec 31, 2016 |
Cash | \(16,500 | \)21,000 |
Short-term investments | 25,000 | 19,000 |
Accounts receivables | 43,000 | 45,000 |
Allowance for doubtful accounts | (1,800) | (2,000) |
Prepaid expenses | 4,200 | 2,500 |
Inventory | 81,500 | 65,000 |
Land | 50,000 | 50,000 |
Buildings | 125,000 | 73,500 |
Accumulated depreciation 鈥� Buildings | (30,000) | (23,000) |
Equipment | 53,000 | 46,000 |
Accumulated depreciation 鈥� equipment | (19,000) | (15,500) |
Delivery equipment | 39,000 | 39,000 |
Accumulated depreciation 鈥� delivery equipment | (22,000) | (20,500) |
Patents | 15,000 | 0 |
\(379,400 | \)300,000 | |
Accounts payable | \(26,000 | \)16,000 |
Short-term note payable | 4,000 | 6,000 |
Accrued payable | 3,000 | 4,600 |
Mortgage payable | 73,000 | 53,400 |
Bond payable | 50,000 | 62,500 |
Common stock | 140,000 | 102,000 |
Paid-in-capital in excess of par | 10,000 | 4,000 |
Retained earnings | 73,400 | 51,500 |
\(379,400 | \)300,000 |
Dividends in the amount of $15,000 were declared and paid in 2017.
Instructions
From this information, prepare a worksheet for a statement of cash flows. Make reasonable assumptions as appropriate. The short-term investments are considered available-for-sale and no unrealized gains or losses have occurred on these securities
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