— “aurainary item (net of Net cash from (used j ote : Listed com ax) 'n) operating activities — €s in India must use the indirect method, Both the methods give ©M operating activities, It is preferable to use the above method, cash flows f Tom oper; ‘ating activities by indirect method, can be Presented Panic ini cane figure of cash fr Alternatively, follows: Cash flows from operatin, Closing credit balance of Surplusin the Statement of Profit i i Gee (Approprintons pani ent of Profit and Loss [ie.closing balance less: Opening credit balance of Surpl lus in th balance of Profit and Loss (Approp: 8 Activities e Statement of Profit. and Loss [ie. opening | riation) Account]" j | ¢ Transfer to reserve | ¢ Final dividend for the previous" year | ¢ Interim dividend paid during the year ¢ Provision for tax made during the ) # Increase in deferred tax liability | XXX * Extraordinary expense transferred to the Statement of Profit & Loss | * Premium on redemption of preference shares provided out of P&L A/c | year and prior period tax expense “Asuming that no entry has been passed for proposed dividend as per AS-4 (Revised. acASH FLOW STATEMEN? _ Ito Statement of Pay ansferr gs vane -dusn avin yd tax si Refund of taxand pret periot the year od tax liability _ @ Deer ‘ein deferred tax liability ihestatement of Profitand Loss(Gecreaiy F Jinary in vome transferred £0 ¢ Extraordinary ine to Profit and Loss Account) Net Profit before taxation and extr Adjustments for: ‘Add: (Non-cash and non Loss): ‘@ Depreciation prov Intangible assets WT raordinary item ting expenses transferred to the Statement of Profit an¢ operating &% s fl ded during the year ritten off d equipment . @ Loss on sale of property plant ant ‘Loss on sale of long-term investments 1 © peatminary expenses written off es 1 X @ Discount on Issue of Shares/Debentures written o! x st e paid on Borrowings X S edad operating incomes transferred to the Statement of Profit and @ Dividend income oO @ Interest income ' a Profit on sale of property, plant and equipment oO Profit on sale of long-term investments a @ Rental income i ms Operating profit before working capital changes" u u Add: (Decrease in current assets (except cash and cash equivalents) and increase in current liabilities (except provision for tax and dividend payable)}: @ Decrease in inventories xu Decrease in gross trade debtors Ip19q0 f xn Decrease in bills receivables x Decrease in prepaid expenses ae xy Increase in trade creditors dee eae at x Increase in bills payables . u x Tetra come eee voles x Increase in paaeaiyaat eae : 3 flncreage in cu"eh ask loubtful debts x nt liabilities e Paras (except cash and cash equi ann rian for tax and dividend equivalents) and decress* '") payable}: ao Increase se in gross trade receivabl Increase i heresse in prepaid expenses ecrease in trade Decrease i ine tte Homeceie * trade credi Dec mine itors and bil Davee inion vetted eg va ie Provision for di dee loubtful d lebts les (te. trade ide debtors and bills receivables)CASH FLOW STATEMENT 10.17 z Cash generated from operations xxx Less: Income tax paid (net of refund) 2000 XXX Cash flow before extraordinary item Lda Less : Extraordinary item, (Add if cash has been received and deduct if cashhas | XXX XXX been paid) 1 Cash from operating activities wRercwEnt0.18 CASH FLOW STATEMENT Cash flows from investing activities Purchase of fixed assets (for cash) Proceeds from sale of fixed assets Proceeds from sale of long-term investments Purchase of long-term investment (for cash) Interest income received on long-term investments and loans and advances Dividend income received on long-term investments Rental income received Cash from (used in) investing activities Cash flows from financing activities Proceeds from issuance of share capital (including securities premium received) Proceeds from long-term borrowings including debentures Redemption of Preference shares Buy back of shares ipal and interest on long-ter ii Dividends paid Sterm borrowings Net Cash from (used in) financing activities Net increase, (decre, (XXX) (XXX) (XXX) XXX “I ‘ase) in cash an, ‘ash and cash equivalents at the b Cash and Cash equi a transactio, ms Non-cach «.. 45 (A) anne. 8 Of th ivalents at the end of the ae a ILLUSTRarTy Classify the following (d) XXX/(XMD xxx xxv xv NMCASH F LOW STATEMENy BALANCE Sitters (ag i 10.65 GEE virile - s (ger AND VUNDTLTIES a (parle funds i iy shave Capital reserves and Surplus 1 20,00,000 | 25,00,000 iyonecurtent Habilities 2 | 10,00,000 | '12,30,000 + ong term Borrowings (Term loans) yrent liabilities 10,00,000 | 8,00,000 7 trade Payables (Sundry creditors) (p Short-term Provisions 3 ARO aoe wel 51,00,000 | 54,50,000 ASSETS .Non-current Assets (o Property, Plant and Equipment 4. | 25,00,000 | 28,00,000 (b Non-current investments (Investments) 2,00,000 | 1,00,000 2.Current Assets (@ Inventories (Stock-in-trade) 6,00.000 | “'5,60,000 () Trade Receivables (Sundry Debtors)" ¢ 8,00,000 (9 Cash and Cash Equivalents © sbtrs 5 10,00,000 51,00,000_ 1 Share capital sued, Subscribed and fully paid up { : . 20,00,000 | 25,00.000 Equity shares of € 10 each 2 Reserves and Surplus =} 20,000 Coital Reserve 5,00,000 | 6,00,000 pare Reserve a 5,00,000 | 610,000 Surplus ie, Balance in the Statement of P & 10,00,000 1,00,000 1 (_ttterm Provision: Proviston for Tax erty, Plant and Equipment 15,00,000 | 18,40,000 land Building Machin, 25,00,000 | 28,00,000 ae ee 10,00,000 |. 9,60,000y STATEMENT 6 CASH FLOW 10.6 _ — 20228) + ey 7 ; Sg 5, Cash and cash equivalents 410. Cash in Hand “600005, 22 Cash at Bank { 829 0,00,005 || ae S09 | 2.00.09) 5s oposed Dividend _ ue 6 Es wes eon won paid dig the year ended 31st March, 2023 for the Yer 31st March, 20. / tb) During the vear, company purchased machinery fort 450.000 The Company paid 2m cash and issued 20,000 equity shares of & 10.cach at par. ic) Income tax provided during the year® 1,10,000. / |g) The comipany sold some investment ata profit of € 20,000 which was credited to Coptatp, serve (c) There was no sale of machinery during the year. () Depreciation written off on Land and Building ® 40,000. From the above particulars prepare a Cash Flow Statement for the year ended 31st March, 2023, per AS-3 using indirect method. a [B. Com. (H) Dethi, 2016, Modifet ( CASH FLOW STATEMENT; OF LOTUS ETD. for the year ended 31st March, 2023 Particulars SOLUTION ; ae TS L = ee operating activities eee jet profit before tax (4,10 000 + 000) (WN 1 and 2) 5,20,000 “operating items; ! dings (WN 4) Operating oy ON) ran Prt before working capital ooo Decrease in Creditors ial changes J 7-670000 | Decrease in Stock 00.00 seerets in Debtors O00 é Ssh benetated fom operay oo Lacon tax pald = Oe fet cash . Cath Lomo ‘sting activig ee bom a ti (90,000) el ale o lovestmen cy a me i te re sabe machine ash from igs a 4 2 investing Aectiviy ay (250,000) a3“ ASH PLOW Star pat Nt AES Particulars al > ino" i Wvitles | eae es Q a cos from SHE OF Euity Shapes yy 5 | . vent of Dividend (WN 6) AN) 400,00 0 payment of Term Loan | 2.00.00) | > es vou front financing activities 2.00000) | . gevinorease/ (decrease) in Nand Cash Equivak On . “Mind Cash Equivalents atthe beginning lone 10,00,000 ad Cash Equivalents at the end Ss 1. Calculation of profit after tax .e of Surplus in Statement of P & L wing balan ns pening balance of Surplus in Statement ae ote 5,00,004 fer to General Reserve 1,10,000 1,00,000 Trans! dividend of previous year recommended i r after the Bal previous, year and adjusted as per revised AS-4 after Seer aie |] Sistatement of P & Lin the current year ,00,000 000 & 2. PROVISION FOR TAX ACCOUNT Z Te Parteners = = ToBank A/c (bal. fig.) 90,000 | By Balance b/d 1,00,000 1,20,000 | By Profit and Loss A/c 1,10,000 ToBalance b/d 2,10,000 kh Cr. E _Particula TeBalance b/d Capital Reserve A/c _ 3, INVESTMENTS ACCOUNT mi Particiilar By Bank A/c (bal. fi) 20,000 | By Balance c/d fe er ue ae h T ACCOUNT 4. LAND AND BUILDINGS : a ff tion AVe (bat fi) ; By Depreciation 9,60,000. By afanee [roquou. a = ts10.68 CASH FLOW ST. ENT 5. MACHINERY ACCOUNT Particulars Se i Particulars. To Balance b/d '5,00,000 | By Depreciation A/c (bal. fiz) To Equity Share Capital A/c 2,00,000 | By Balance c/d 2,50,000 19,50,000 6. DIVIDEND PAYABLE ACCOUNT aan 2,00,000 By Profit and Loss (App) A/c Particulars To Bank A/c 7. EQUITY SHARE CAPITAL ACCOUNT G Particulars ie i Particulars z c/d 25,00,000 | By Balance b/d 20,0000 By Machinery A/c 2,000 a By Bank A/e 30000 25,00,000 23,00,00 (Debenture interest, premium on redemption of debentures, unpaid divides! '* overdraft a8 component of cash and cash equivalents) 14 particulars of XY Lid, prepare a Cash Flow Statement. BALANCE SHEET ILLUSTRATION 24 and treatment of ban From the followGener SRI yo al reserve ac | 31.03.2023) Stax “8 1055.00" 03.2023, | 20000 09 Profit and loss Ale Securities premium Capital redemption reserve Non-current li abilities (12% Current abilities: (12% debentures) | Outstanding interest on debentures Outstanding underwriting commission Rcot Unclaimed dividend on equity shares ee <20,000 30,000 | Non-current assets (Machinery) Additional Information: () On Ist April, 2022, dividends (including an equity dividend @ 35%) were paid. (i) On Ist May, 2022, 20,000 equity shares of €10 each were issued to public @ 815 preference shares at 5% premium. 22, 1,000 preference shares of & 100 each @Z15.On the same date, 50% of deben 1g in equity shares of © 10 each @ & 15 ea ‘gsued to public. all pul issued to pu ntures were red hand some new (ii) On Ist Oct, 20: buy back 15,000 equity shares at 10% premium, by convertin debentures of € 100 each wer (iv) Underwriters were ntitled to ¢ as per the Companic A sat maximum rate Si sues of securitie ommission on blic issues ofC6 TOPIC-WISE ADDITIONAL ILLUSTRATIONS, a machinery costing € 30,000 was purchased by issue of equity shares of £10 each at a premium of 20%. [B.Com. (Hons.), Delhi 2024) SOLUTION: CALCULATION OF CASH FLOWS FROM FINANCING ACTIVITIES Particulars eo ee Z e ea Issue of equity shares for cash (¥ 2,00,000 + & 1,00,000) . 3,00,000 Buy-back of equity shares © 1,50,000 + % 75,000) (2,25,000) Issue of preference shares © 1,00,000 + % 50,000) : = 1,50,000 Redemption of preference shares © 3,00,000 +€ 15,000)” B,15,000) Issue of debentures 2,00,000 Interest on debentures paid (W. N. 1) (15,500) Dividend on equity shares paid (W. N. 2) (1,90,000) Dividend on preference shares paid & 4,00,000 x 5/100) ve (20,000) Underwriting commission paid (W. N. 3) Y (22,500) Net cash used in financing activities (1,38,000) Working Notes: 1, Interest on debentures paid = € 1,50,000 X 6/100) + ® 2,75,000 X 6/100) -® 10,000 = 15,050 : 2. Dividend on equity shares paid = © 6,00,000 x 35/100) - % 20,000 = 1,90,000 3. Underwriting commission paid pet! = € 1,50,000 + 3,00,000) x 5%] + & 2,00,000 x 2.5/100) - & 5,000 = 22,500 ILLUSTRATION 6: (Valuation of goodwill) (VALUATION OF INTANGIBLE ASSETS AND SHARES)