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Chapter 23: Q5ISTQ (page 1399)

For purposes of the statement of cash flows, under IFRS, income taxes paid are treated as:

  1. cash flows from operating activities unless they can be separately identified as part of investing or financing activities.
  2. an operating activity in all cases.
  3. an investing or operating activity, depending on whether a refund is received.
  4. either operating, financing, or investing activity, but treated consistently to other companies in the same industry.

Short Answer

Expert verified

The correct option is 鈥渁鈥�.

Step by step solution

01

Meaning of Cash flow Statement

The cash flow statement details changes in the company's cash and cash equivalents throughout an accounting period. This modification combines the interests in business, finance, and investing.

02

Explaining the correct option

Unless they can be specifically identified as a component of investing or financing activities, income taxes paid are regarded as cash flows from operating activities for the statement of cash flows under IFRS.

03

Explaining the incorrect option

Option b) Income taxes are not always part of the operating activities under cash flow statement.

Option c) For the statement of cash flows, under IFRS, income taxes paid are treated as cash flows from operating activities unless they can be separately identified as part of investing or financing activities. It is not dependent on the receipt of refund.

Option d) It is reported in operating activity section, but can be reported in investing and financing also. The treatment is not same for the companies in the same industry.

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Most popular questions from this chapter

Question: The board of directors of Tirico Corp. declared cash dividends of \(260,000 during the current year. If dividends payable was \)85,000 at the beginning of the year and $90,000 at the end of the year, how much cash was paid in dividends during the year?

Stansfield Corporation had the following activities in 2017.

1. Payment of accounts payable \(770,000.

4. Collection of note receivable \)100,000.

2. Issuance of common stock \(250,000.

5. Issuance of bonds payable \)510,000.

3. Payment of dividends \(350,000.

6. Purchase of treasury stock \)46,000.

Compute the amount Stansfield should report as net cash provided (used) by financing activities in its 2017 statement of cash flows.

Stan Conner and Mark Stein were discussing the statement of cash flows of Bombeck Co. In the notes to the statement of cash flows was a schedule entitled 鈥淣on-cash investing and financing activities.鈥� Give three examples of significant non-cash transactions that would be reported in this schedule.

In 2017, Wild Corporation reported a net loss of \(70,000. Wild鈥檚 only net income adjustments were depreciation expense \)81,000, and increase in accounts receivable $8,100. Compute Wild鈥檚 net cash provided (used) by operating activities.

Data for Krauss Company are presented in E23-5.

Instructions

Prepare the operating activities section of the statement of cash flows using the indirect method.
See all solutions

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