T-Shirt Pros’ statement of cash flows, as it was prepared by the company accountants, reported the following for the period, and had no other capital expenditures.īecause of the misplacement of the transaction, the calculation of free cash flow by outside analysts could be affected significantly. This noncash investing and financing transaction was inadvertently included in both the financing section as a source of cash, and the investing section as a use of cash. The company’s policy is to report noncash investing and financing activities in a separate statement, after the presentation of the statement of cash flows. During this period, the company had purchased a warehouse building, in exchange for a $200,000 note payable. While reviewing the financial statements that were prepared by company accountants, you discover an error. They include IFRS 10 Consolidated Financial Statements (issued May 2011), IFRS 11 Joint Arrangements (issued May 2011), Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) (issued October 2012), IFRS 16 Leases (issued January 2016) and IFRS 17 Insurance Contracts (issued May 2017).Classification of Cash Flows Makes a DifferenceĪssume you are the chief financial officer of T-Shirt Pros, a small business that makes custom-printed T-shirts. Other Standards have made minor consequential amendments to IAS 7. These amendments require entities to provide disclosures about changes in liabilities arising from financing activities. ![]() In January 2016 IAS 7 was amended by Disclosure Initiative (Amendments to IAS 7). IAS 7 Cash Flow Statements replaced IAS 7 Statement of Changes in Financial Position (issued in October 1977).Īs a result of the changes in terminology used throughout the IFRS Standards arising from requirements in IAS 1 Presentation of Financial Statements (issued in 2007), the title of IAS 7 was changed to Statement of Cash Flows. In April 2001 the International Accounting Standards Board adopted IAS 7 Cash Flow Statements, which had originally been issued by the International Accounting Standards Committee in December 1992. ![]()
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