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SCF With DO

The document discusses requirements for disclosing cash flows from discontinued operations separately from continuing operations in the statement of cash flows. It provides an example of a consolidated statement of cash flows for P Limited for the year ended December 31, 2022. The statement shows total cash flows from operating, investing and financing activities, with cash flows from continuing and discontinued operations disclosed separately. It also includes notes explaining movements in non-current assets, equity and non-controlling interests.

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11 views

SCF With DO

The document discusses requirements for disclosing cash flows from discontinued operations separately from continuing operations in the statement of cash flows. It provides an example of a consolidated statement of cash flows for P Limited for the year ended December 31, 2022. The statement shows total cash flows from operating, investing and financing activities, with cash flows from continuing and discontinued operations disclosed separately. It also includes notes explaining movements in non-current assets, equity and non-controlling interests.

Uploaded by

Muhammad Asif Khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Tutorial note: The net cash flows attributable to the operating, investing and financing activities of

discontinued operations need to be disclosed separately from continuing operations. These disclosures
may be presented either in the notes or in the statement of cashflow itself. statements. In exam you
should present in the Statement of cashflows itself only if examiner asks for it. Otherwise, please ignore
this requirement.

Example: Statement of Cashflows with Discontinued Operation


Given below are the Consolidated financial statements of P Limited for the year ended December 31, 2022.

Statement of financial position:


2022 2021 2022 2021
Rupees in millions Rupees in millions
Assets Equity and liabilities
Property, plant and equipment 4,000 3,000 Share capital 2,000 2,000
Intangibles 145 30 Retained earnings 1,700 1,200
Inventory 500 400 Non-controlling interests 762 330
Cash and Bank Balances 417 400 Trade payables 900 500
Trade receivables 300 200
5,362 4,030 5,362 4,030

Statement of comprehensive income:


2022
Rs 'm
Profit before interest & tax 1,500 Profit from continuing operations attributable to:
Interest expense (100) Parent 600
Profit before tax 1,400 Non-controlling interests 380
Taxation (30%) (420) 980
Profit after tax from continuing operations 980 Profit from discontinued operations attributable to:
Profit from discontinued operations 190 Parent 738
Profit after tax 1,170 Non-controlling interests 432
1,170

Non-cash expenses include depreciation amounting to Rs 70 million and amortization of intangibles amounting to Rs 10 million.

Discontinued operations represent a Subsidiary held for sale at the end of the year. Summarized Separate Statement of
cashflows of this Subsidiary is given below. These cashflows include receipts against sale of inventory amounting to Rs 60 million
to P Limited during the year.
2022
Rs 'm
Net cash from operating activities 240
Net cash used in investing activities (90)
Net cash from financing activities 10
Net increase in cash & cash equivalents 160

Required: Prepare consolidated statement of cashflows of P Limited under IAS-7 for the year ended December 31, 2022 using
the indirect method.
Solution:
Consolidated Statement of cashflows
For the year ended 31 December 2022
Rs "m" Rs "m"
Cashflows from operating activities
Profit before tax 1,400
Adjustments:
Interest expense 100
Amortization 10
Depreciation 70
180
Working capital changes:
Trade receivable [200 - 300] (100)
Inventory [400 - 500] (100)
Trade payables [900 - 500] 400
200
Cash generated from operations 1,780
Interest paid (100)
Income taxes paid (420)
Net cash from operating activities 1,260
- From continuing operations (Balancing) 1,080
- From discontinued operations (240-60) 180

Cashflows from investing activities


Payment for purchase of Intangibles (125)
Payment for purchase of PPE (1,070) (W1)
Net cash used in investing activities (1,195)
- From continuing operations (Balancing) (1,105)
- From discontinued operations (Given) (90)

Cashflows from financing activities


Dividend paid by Parent (48) (W3)

Net cash used in financing activities (48)


- From continuing operations (Balancing) (58)
- From discontinued operations (Given) 10

Net increase in cash and cash equivalents during the year 17


Cash and cash equivalents at the beginning of the year 400
Cash and cash equivalents at the end of the year 417
W1. PPE Rs "m" Rs "m" W2. Intangible assets
B/F 3,000 B/F 30 Amort. 10
Cash 1,070 Dep. 70 Cash 125 C/F 145
C/F 4,000

4,070 4,070 155 155

W3. Retained earnings W4. NCI


Cash 48 B/F 1,200 B/F 330
Tax 420 PBT 1,400 Profit CO 432
NCI 432 C/F 762
C/F 1,700
2,600 2,600 762 762

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