Question Tag: Indirect Method

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CR – May 2021 – L3 – Q1a – Consolidated Financial Statements (IFRS 10)

Prepare a consolidated cash flow statement for Feedme Limited using the indirect method.

Question

Feedme Limited
Feedme Limited is a company that has been in operations for over two decades producing “Trobomao,” a natural cocoa powder beverage. Five years ago, it acquired 100% interest in Butane Nigeria Limited and 75% interest in Shawama Supermarket Limited in 2019. Draft consolidated financial statements of Feedme Limited are provided below:

Draft Consolidated Statement of Financial Position (December 31, 2019):

Draft consolidated statement of profit or loss and other comprehensive income for the year ended December 31, 2019

Additional information:

i. There had been no acquisition or disposal of freehold buildings during the year.
ii. Information relating to the acquisition of Shawama Supermarket Limited is as follows:

iii. Loan notes were issued at a discount in 2019 and the carrying amount of the loan as at December 31, 2019 included N600,000 representing the finance cost attributable to the discount and allocated in respect of the current reporting period.

Required:
Prepare a consolidated statement of cash flows for Feedme Limited Group for the year ended December 31, 2019 in accordance with IAS 7 using indirect method.

Answer

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Tags: Cash Flow, Consolidation, Indirect Method, Non-Controlling Interest, Working Capital Adjustments
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)

FR – Nov 2015 – L2 – Q6 – Statement of Cash Flows (IAS 7)

Prepare the statement of cash flows and comment on cash flow management for Global Plc.

Question

Global Plc is an entity quoted on the Nigerian Stock Exchange. You are provided with the following set of summarized published financial statements of the company for the year ended September 30, 2014:

Statement of profit or loss and other comprehensive income for the year ended September 30, 2014

Item	N’000
Revenue	500,000
Cost of sales	(300,000)
Gross profit	200,000
Administrative expenses	(29,000)
Finance cost	(1,000)
Profit before taxation	170,000
Income tax expense	(40,000)
Profit for the period	130,000

Statement of financial position as at September 30, 2014

Item	2014 (N’000)	2013 (N’000)
Non-current assets
Property, plant, and equipment	200,000	220,000
Goodwill	–	10,000
Current assets
Inventories	100,000	80,000
Trade receivables	75,000	60,000
Bank balances	20,000	5,000
Total assets	395,000	375,000

Equity and Liabilities	2014 (N’000)	2013 (N’000)
Equity
Ordinary shares @ N1.25 each	10,000	8,000
Retained earnings	250,000	197,000
Total equity	260,000	205,000

The following information is relevant:

During the financial year, the company paid a dividend of N87,000,000 to equity holders, and this had been accounted for during the year. The current market price of the company’s shares is N10 per share.
The company is planning to take a long-term loan of N400,000,000 from a consortium of banks. The company’s financial statements and loan applications have already been submitted to the bank.

Answer

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Tags: Cash Flow, Direct Method, Financing Activities, IAS 7, Indirect Method, Operating Activities
Level: Level 2

Topic: Statement of Cash Flows (IAS 7)
Series: NOV 2015

FR – May 2022 – L2 – SB – Q4 – Statement of Cash Flows

Prepare the statement of cash flows for Odibeze Nigeria PLC for the year ended April 30, 2021, using the indirect method, and explain the term cash and cash equivalents.

Question

The following financial statements were extracted from the 2021 annual report and accounts recently published by Odibeze Nigeria PLC.

Additional Information:

During the financial year, the company made a bonus issue of one share for every six shares held and a cash issue at N1.90kobo per share to provide funds for its anticipated expansion.
The company revalues its freehold properties annually, transferring any resulting surplus to the revaluation reserve.
A plant with a carrying amount of N20,000,000 was disposed of on September 30, 2020, for N11,200,000. The depreciation charge for the remaining plant and machinery was N24,000,000.
The investment income represents interest received on trade investments. Trade investments suffered an impairment loss of N10,000,000 by the year-end.
The company paid an interim dividend of N25,000,000 and proposed a final dividend of N45,000,000.

Required:
a. Prepare the statement of cash flows of Odibeze Nigeria PLC for the year ended April 30, 2021, in accordance with IAS 7, using the indirect method. (17 Marks)
b. In the context of IAS 7 – Statement of Cash Flows, explain the term “cash and cash equivalents” and list THREE examples. (3 Marks)

Answer

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Tags: Cash and Cash Equivalents, Cash Flow, Indirect Method
Level: Level 2

Topic: Statement of Cash Flows (IAS 7)
Series: MAY 2022

FR – NOV 2016 – L2 – Q4 – Statement of Cash Flows (IAS 7)

Preparation of statement of cash flows using indirect method and explanation of benefits of published cash flow statements to users.

Question

The summarised Financial Statements for the year ended March 31, 2016 of Perfect World Plc are as follows:

STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED MARCH 31, 2016

	N’m
Revenue	19,350
Cost of Sales	(9,000)
Gross Profit	10,350
Operating Expenses	(4,500)
Finance Costs	(1,125)
Profit Before Tax	4,725
Income Tax Expense	(2,025)
Profit for the year	2,700

STATEMENT OF FINANCIAL POSITION AS AT MARCH 31

	2016	2015
	N’m	N’m
Non-Current Assets:
Property, Plant & Equipment	18,900	16,650
Current Assets
Inventories	6,750	7,200
Trade Receivables	9,900	8,100
	16,650	15,300
Total Assets	35,550	31,950
Equity
Share Capital	5,400	5,400
Retained Earnings	9,900	8,550
	15,300	13,950
Non-Current Liabilities
Deferred Tax	4,815	3,825
Financial Lease Liabilities	5,850	5,400
	10,665	9,225
Current Liabilities
Trade Payables	5,625	4,905
Current Tax	1,013	923
Finance Lease Obligation	2,250	2,025
Bank Overdraft	697	922
	9,585	8,775
Total Equity & Liabilities	35,550	31,950

Additional Information include:

(i) Dividend paid during the year amounted to N1,350million.

(ii) Perfect World Plc finances a number (but not all) of its property plant and equipment purchased using finance lease. During the period, property, plant and equipment which would have cost N2,700million to purchase outright was acquired under finance lease.

(iii) There was no accrual of interest at the beginning or at the end of the year.

(iv) Depreciation charged for the year totalled N4,365million. There were no disposals of property, plant and equipment during the year.

Required:

a. Prepare the statement of cashflows of Perfect World Plc for the year ended March 31, 2016 using indirect method. (14 Marks)

b. Draft a Memo to the Director of Perfect World Plc summarising the major benefits that users receive from a published statement of cashflows. (6 Marks)

Answer

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Tags: Cash Flow Statement, Financing Activities, Indirect Method, Investing Activities, Operating Activities
Level: Level 2

Topic: Statement of Cash Flows (IAS 7)
Series: NOV 2016

FR – May 2018 – L2 – Q3 – Statement of Cash Flows (IAS 7)

Prepare a statement of cash flows using the indirect method and reconcile cash equivalents with the statement of financial position.

Question

The statement of financial position of Abagana Plc as at July 31, 2016, and 2017 is shown below

Statement of Financial Position as at July 31

Additional Information:

Equipment costing N45,000 was sold in February 2017 for N15,000. The company depreciates equipment at 20% per annum on cost, with a full charge in the year of acquisition and none in the year of disposal.
Non-current asset investments costing N38,000 were sold during the year for N31,500.
Dividends received during the year amounted to N7,500. Dividends paid during the year totaled N150,000.
The 14% loan notes were redeemed in January 2017, and 12% loan notes were issued in July 2017.
The company issued N75,000 ordinary shares at a premium of 60 kobo per share in January 2017.
The net cash flow from operating activities using the indirect method is a deficit of N187,000.

Required: a. Prepare a statement of cash flows for the year ended July 31, 2017, in accordance with IAS 7, using the indirect method. (12 Marks)

b. Reconcile the total cash and cash equivalents shown by the statement of cash flows to the equivalent figures shown in the opening and closing statements of financial position. (5 Marks)

c. Comment briefly on the significance of the information provided by the statement of cash flows. (3 Marks)

Answer

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Tags: Cash Flows, Financing Activities, IAS 7, Indirect Method, Investing Activities, Operating Activities
Level: Level 2

Topic: Statement of Cash Flows (IAS 7)
Series: MAY 2018

FR – May 2019 – L2 – Q2a and Q2b – Presentation of Financial Statements (IAS 1)

Prepare the statement of cash flows for Babafrayo Nig. Ltd. using the indirect method and calculate the net cash flow from operating activities using the direct method.

Question

Babafrayo Nig. Ltd. is a company located in Lagos and is engaged in the hotel and tourism business. The financial statements of the company are as follows:

Statement of Profit or Loss and Other Comprehensive Income for the Year Ended 31 December 2018:

Description	₦’000
Revenue	994,500
Cost of sales	(884,000)
Gross profit	110,500
Admin expenses	(21,250)
Distribution cost	(44,200)
Finance costs	(4,250)
Profit before taxation	40,800
Income tax expense	(5,100)
Profit for the year	35,700
Other comprehensive income
Gains on property revaluation	17,000
Total comprehensive income	52,700

Statement of Financial Position as at 31 December 2018:

Description	2018 N’000	2017 N’000
Non-current assets:
Property, plant & equipment	242,250	174,250
Total non-current assets	242,250	174,250
Current assets:
Inventories	49,300	51,000
Trade receivables	35,700	25,500
Cash and cash equivalent	2,550	4,250
Total current assets	87,550	80,750
Total assets	329,800	255,000

Additional information:

(i) Property, plant, and equipment with a carrying value of ₦23,800,000 was sold during the year ended 31 December 2018 for ₦24,650,000. The asset had originally cost ₦38,250,000.
(ii) Depreciation on property, plant, and equipment for the year 2018 amounted to ₦34,000,000.
(iii) Dividend paid during the year 2018 amounted to ₦4,250,000 and is reported in the statement of changes in equity for the year.

(a) Prepare the statement of cash flows for the year ended 31 December 2018 in accordance with IAS 7 using the indirect method.
(12 Marks)

(b) Prepare net cash flows from operating activities only using the direct method.
(6 Marks)

Answer

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Level: Level 2

Topic: Presentation of Financial Statements (IAS 1)
Series: MAY 2019

FA – May 2018 – L1 – SB – Q2 – Statement of Cash Flow

Prepares the statement of cash flow for Uwana Manufacturing Limited using the indirect method.

Question

The financial statements of Uwana Manufacturing Limited are given below:

Additional Information:
In 2017, a plant costing N466,000 with accumulated depreciation of N335,000 was disposed of for N186,000. Included in trade payables is accrued interest of N37,000 (N18,000 in 2016). The trade payables include a creditor for plant purchased of N18,000.

Required:
Prepare a statement of cash flow for the year ended December 31, 2017, using the indirect method.

Answer

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Tags: Cash Flow, Financial Statements, Indirect Method
Level: Level 1

Topic: Statement of Cash Flows (IAS 7)
Series: MAY 2018

FR – Nov 2018 – L2 – SA – Q1b – Statement of Cash Flows (IAS 7)

Compare the direct and indirect methods of preparing a statement of cash flows.

Question

Compare the direct and indirect methods of preparing a statement of cash flows.

Answer

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Level: Level 1

Topic: Statement of Cash Flows (IAS 7)
Series: NOV 2018

FR – Nov 2018 – L2 – SA – Q1a – Statement of Cash Flows (IAS 7)

Prepare a statement of cash flows for Oshodi Nigeria Ltd using the indirect method and IAS 7.

Question

The financial statements of OSHODI Nigeria Limited for the year ended May 13, 2017, are as follows:

Statement of Profit or Loss for the year ended May 31, 2017:

Item	N’m
Revenue	3,820
Cost of sales	(2,620)
Gross profit	1,200
Operating expenses	(300)
Profit before interest and tax	900
Interest	(30)
Profit before tax	870
Taxation	(270)
Net profit	600

Statement of Financial Position as at May 31, 2017 (with comparative figures for 2016):

Assets	2017 N’m	2016 N’m
Non-Current Assets
Property, plant, and equipment	1,890	1,830
Intangible assets	650	300
Total non-current assets	2,540	2,130
Current Assets
Inventory	1,420	940
Accounts receivable	990	680
Cash	70	Nil
Total current assets	2,480	1,620
Total Assets	5,020	3,750

Equity and Liabilities:

Equity	2017 N’m	2016 N’m
Ordinary shares of N1 each	750	500
Share premium	300	100
Revaluation reserve	190	Nil
Retained earnings	1,610	1,400
Total equity	2,850	2,000

OSHODI NIGERIA LIMITED
Statement of Changes in Equity for the year ended May 31 2017

Notes to the financial statements:
(1) Cost of sales includes depreciation of property, plant and equipment of N320 million and a
loss on the sale of plant of N50 million. It also includes a credit for the amortisation of
government grants. Operating expenses include a charge of N20 million for the amortisation
of goodwill

(2)

(3)

(4)

The following additional information is relevant:
(i) Intangible assets:
The company successfully completed the development of a new product during the current
year, capitalising a further N500 million before amortisation charges for the period.

(ii) Property, plant and equipment/revaluation reserve:
The company revalued its buildings by N200 million on June 1 2016. The surplus was
credited to revaluation reserve.

New plant was acquired during the year at a cost of N250 million and a government grant
of N50 million was received for the plant.
On June 1, 2016, a bonus issue of 1 new share for every 10 held was made from the share
premium.
N10 million has been transferred from the revaluation reserve to realized profits as a year-end adjustment in respect of the additional depreciation created by the revaluation.
The remaining movement on property, plant and equipment was due to the disposal of
obsolete plant.

(iii) Share issue:
In addition to the bonus issue referred to above, Oshodi Nigeria Limited made a further issue
of ordinary shares for cash.

Required:
Prepare the statement of cash flows for Oshodi Nigeria Limited for the year ended May 31, 2017, using the indirect method according to IAS 7.

Answer

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Tags: Financing Activities, Indirect Method, Investing Activities, Operating Activities, Statement of Cash Flows
Level: Level 1

Topic: Statement of Cash Flows (IAS 7)
Series: NOV 2018

FA – Nov 2014 – L1 – SB – Q6b – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Preparing the statement of cash flows (indirect method) showing cash generated from operating activities.

Question

The financial data extracted from the books of Solomon Enterprises Limited for the year ended 31 December 2013 are as follows:

Particulars	N’000
Sales	55,924
Cost of sales	41,028
Selling and distribution expenses	2,748
Administration expenses	2,404
Interest expenses	1,528
Tax paid	1,584
Increase in inventories	11,868
Decrease in receivables	1,416
Increase in payables	4,944

Additional information:
Included in administration expenses are:
i. Depreciation charges for the year of N500,000
ii. Loss on disposal of assets of N48,000

Required:
Prepare the Statement of Cash Flows showing cash flow generated from operating activities using the indirect method. (11 Marks)
Show all workings.

Answer

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Level: Level 1

CR – May 2021 – L3 – Q1a – Consolidated Financial Statements (IFRS 10)

Prepare a consolidated cash flow statement for Feedme Limited using the indirect method.

Question

Draft Consolidated Statement of Financial Position (December 31, 2019):

Draft consolidated statement of profit or loss and other comprehensive income for the year ended December 31, 2019

Additional information:

i. There had been no acquisition or disposal of freehold buildings during the year.
ii. Information relating to the acquisition of Shawama Supermarket Limited is as follows:

Required:
Prepare a consolidated statement of cash flows for Feedme Limited Group for the year ended December 31, 2019 in accordance with IAS 7 using indirect method.

Answer

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Tags: Cash Flow, Consolidation, Indirect Method, Non-Controlling Interest, Working Capital Adjustments
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)

FR – Nov 2015 – L2 – Q6 – Statement of Cash Flows (IAS 7)

Prepare the statement of cash flows and comment on cash flow management for Global Plc.

Question

Statement of profit or loss and other comprehensive income for the year ended September 30, 2014

Item	N’000
Revenue	500,000
Cost of sales	(300,000)
Gross profit	200,000
Administrative expenses	(29,000)
Finance cost	(1,000)
Profit before taxation	170,000
Income tax expense	(40,000)
Profit for the period	130,000

Statement of financial position as at September 30, 2014

Item	2014 (N’000)	2013 (N’000)
Non-current assets
Property, plant, and equipment	200,000	220,000
Goodwill	–	10,000
Current assets
Inventories	100,000	80,000
Trade receivables	75,000	60,000
Bank balances	20,000	5,000
Total assets	395,000	375,000

Equity and Liabilities	2014 (N’000)	2013 (N’000)
Equity
Ordinary shares @ N1.25 each	10,000	8,000
Retained earnings	250,000	197,000
Total equity	260,000	205,000

The following information is relevant:

During the financial year, the company paid a dividend of N87,000,000 to equity holders, and this had been accounted for during the year. The current market price of the company’s shares is N10 per share.
The company is planning to take a long-term loan of N400,000,000 from a consortium of banks. The company’s financial statements and loan applications have already been submitted to the bank.

Answer

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Tags: Cash Flow, Direct Method, Financing Activities, IAS 7, Indirect Method, Operating Activities
Level: Level 2

Topic: Statement of Cash Flows (IAS 7)
Series: NOV 2015

FR – May 2022 – L2 – SB – Q4 – Statement of Cash Flows

Prepare the statement of cash flows for Odibeze Nigeria PLC for the year ended April 30, 2021, using the indirect method, and explain the term cash and cash equivalents.

Question

The following financial statements were extracted from the 2021 annual report and accounts recently published by Odibeze Nigeria PLC.

Additional Information:

During the financial year, the company made a bonus issue of one share for every six shares held and a cash issue at N1.90kobo per share to provide funds for its anticipated expansion.
The company revalues its freehold properties annually, transferring any resulting surplus to the revaluation reserve.
A plant with a carrying amount of N20,000,000 was disposed of on September 30, 2020, for N11,200,000. The depreciation charge for the remaining plant and machinery was N24,000,000.
The investment income represents interest received on trade investments. Trade investments suffered an impairment loss of N10,000,000 by the year-end.
The company paid an interim dividend of N25,000,000 and proposed a final dividend of N45,000,000.

Answer

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Tags: Cash and Cash Equivalents, Cash Flow, Indirect Method
Level: Level 2

Topic: Statement of Cash Flows (IAS 7)
Series: MAY 2022

FR – NOV 2016 – L2 – Q4 – Statement of Cash Flows (IAS 7)

Preparation of statement of cash flows using indirect method and explanation of benefits of published cash flow statements to users.

Question

The summarised Financial Statements for the year ended March 31, 2016 of Perfect World Plc are as follows:

STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED MARCH 31, 2016

	N’m
Revenue	19,350
Cost of Sales	(9,000)
Gross Profit	10,350
Operating Expenses	(4,500)
Finance Costs	(1,125)
Profit Before Tax	4,725
Income Tax Expense	(2,025)
Profit for the year	2,700

STATEMENT OF FINANCIAL POSITION AS AT MARCH 31

	2016	2015
	N’m	N’m
Non-Current Assets:
Property, Plant & Equipment	18,900	16,650
Current Assets
Inventories	6,750	7,200
Trade Receivables	9,900	8,100
	16,650	15,300
Total Assets	35,550	31,950
Equity
Share Capital	5,400	5,400
Retained Earnings	9,900	8,550
	15,300	13,950
Non-Current Liabilities
Deferred Tax	4,815	3,825
Financial Lease Liabilities	5,850	5,400
	10,665	9,225
Current Liabilities
Trade Payables	5,625	4,905
Current Tax	1,013	923
Finance Lease Obligation	2,250	2,025
Bank Overdraft	697	922
	9,585	8,775
Total Equity & Liabilities	35,550	31,950

Additional Information include:

(i) Dividend paid during the year amounted to N1,350million.

(iii) There was no accrual of interest at the beginning or at the end of the year.

(iv) Depreciation charged for the year totalled N4,365million. There were no disposals of property, plant and equipment during the year.

Required:

a. Prepare the statement of cashflows of Perfect World Plc for the year ended March 31, 2016 using indirect method. (14 Marks)

b. Draft a Memo to the Director of Perfect World Plc summarising the major benefits that users receive from a published statement of cashflows. (6 Marks)

Answer

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Tags: Cash Flow Statement, Financing Activities, Indirect Method, Investing Activities, Operating Activities
Level: Level 2

Topic: Statement of Cash Flows (IAS 7)
Series: NOV 2016

FR – May 2018 – L2 – Q3 – Statement of Cash Flows (IAS 7)

Prepare a statement of cash flows using the indirect method and reconcile cash equivalents with the statement of financial position.

Question

The statement of financial position of Abagana Plc as at July 31, 2016, and 2017 is shown below

Statement of Financial Position as at July 31

Additional Information:

Equipment costing N45,000 was sold in February 2017 for N15,000. The company depreciates equipment at 20% per annum on cost, with a full charge in the year of acquisition and none in the year of disposal.
Non-current asset investments costing N38,000 were sold during the year for N31,500.
Dividends received during the year amounted to N7,500. Dividends paid during the year totaled N150,000.
The 14% loan notes were redeemed in January 2017, and 12% loan notes were issued in July 2017.
The company issued N75,000 ordinary shares at a premium of 60 kobo per share in January 2017.
The net cash flow from operating activities using the indirect method is a deficit of N187,000.

Required: a. Prepare a statement of cash flows for the year ended July 31, 2017, in accordance with IAS 7, using the indirect method. (12 Marks)

b. Reconcile the total cash and cash equivalents shown by the statement of cash flows to the equivalent figures shown in the opening and closing statements of financial position. (5 Marks)

c. Comment briefly on the significance of the information provided by the statement of cash flows. (3 Marks)

Answer

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Tags: Cash Flows, Financing Activities, IAS 7, Indirect Method, Investing Activities, Operating Activities
Level: Level 2

Topic: Statement of Cash Flows (IAS 7)
Series: MAY 2018

FR – May 2019 – L2 – Q2a and Q2b – Presentation of Financial Statements (IAS 1)

Prepare the statement of cash flows for Babafrayo Nig. Ltd. using the indirect method and calculate the net cash flow from operating activities using the direct method.

Question

Babafrayo Nig. Ltd. is a company located in Lagos and is engaged in the hotel and tourism business. The financial statements of the company are as follows:

Statement of Profit or Loss and Other Comprehensive Income for the Year Ended 31 December 2018:

Description	₦’000
Revenue	994,500
Cost of sales	(884,000)
Gross profit	110,500
Admin expenses	(21,250)
Distribution cost	(44,200)
Finance costs	(4,250)
Profit before taxation	40,800
Income tax expense	(5,100)
Profit for the year	35,700
Other comprehensive income
Gains on property revaluation	17,000
Total comprehensive income	52,700

Statement of Financial Position as at 31 December 2018:

Description	2018 N’000	2017 N’000
Non-current assets:
Property, plant & equipment	242,250	174,250
Total non-current assets	242,250	174,250
Current assets:
Inventories	49,300	51,000
Trade receivables	35,700	25,500
Cash and cash equivalent	2,550	4,250
Total current assets	87,550	80,750
Total assets	329,800	255,000

Additional information:

(a) Prepare the statement of cash flows for the year ended 31 December 2018 in accordance with IAS 7 using the indirect method.
(12 Marks)

(b) Prepare net cash flows from operating activities only using the direct method.
(6 Marks)

Answer

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Tags: Cash Flow from Operations, Direct Method, Indirect Method, Statement of Cash Flows
Level: Level 2

Topic: Presentation of Financial Statements (IAS 1)
Series: MAY 2019

FA – May 2018 – L1 – SB – Q2 – Statement of Cash Flow

Prepares the statement of cash flow for Uwana Manufacturing Limited using the indirect method.

Question

The financial statements of Uwana Manufacturing Limited are given below:

Required:
Prepare a statement of cash flow for the year ended December 31, 2017, using the indirect method.

Answer

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Tags: Cash Flow, Financial Statements, Indirect Method
Level: Level 1

Topic: Statement of Cash Flows (IAS 7)
Series: MAY 2018

FR – Nov 2018 – L2 – SA – Q1b – Statement of Cash Flows (IAS 7)

Compare the direct and indirect methods of preparing a statement of cash flows.

Question

Compare the direct and indirect methods of preparing a statement of cash flows.

Answer

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Level: Level 1

Topic: Statement of Cash Flows (IAS 7)
Series: NOV 2018

FR – Nov 2018 – L2 – SA – Q1a – Statement of Cash Flows (IAS 7)

Prepare a statement of cash flows for Oshodi Nigeria Ltd using the indirect method and IAS 7.

Question

The financial statements of OSHODI Nigeria Limited for the year ended May 13, 2017, are as follows:

Statement of Profit or Loss for the year ended May 31, 2017:

Item	N’m
Revenue	3,820
Cost of sales	(2,620)
Gross profit	1,200
Operating expenses	(300)
Profit before interest and tax	900
Interest	(30)
Profit before tax	870
Taxation	(270)
Net profit	600

Statement of Financial Position as at May 31, 2017 (with comparative figures for 2016):

Assets	2017 N’m	2016 N’m
Non-Current Assets
Property, plant, and equipment	1,890	1,830
Intangible assets	650	300
Total non-current assets	2,540	2,130
Current Assets
Inventory	1,420	940
Accounts receivable	990	680
Cash	70	Nil
Total current assets	2,480	1,620
Total Assets	5,020	3,750

Equity and Liabilities:

Equity	2017 N’m	2016 N’m
Ordinary shares of N1 each	750	500
Share premium	300	100
Revaluation reserve	190	Nil
Retained earnings	1,610	1,400
Total equity	2,850	2,000

OSHODI NIGERIA LIMITED
Statement of Changes in Equity for the year ended May 31 2017

(2)

(3)

(4)

(ii) Property, plant and equipment/revaluation reserve:
The company revalued its buildings by N200 million on June 1 2016. The surplus was
credited to revaluation reserve.

New plant was acquired during the year at a cost of N250 million and a government grant
of N50 million was received for the plant.
On June 1, 2016, a bonus issue of 1 new share for every 10 held was made from the share
premium.
N10 million has been transferred from the revaluation reserve to realized profits as a year-end adjustment in respect of the additional depreciation created by the revaluation.
The remaining movement on property, plant and equipment was due to the disposal of
obsolete plant.

(iii) Share issue:
In addition to the bonus issue referred to above, Oshodi Nigeria Limited made a further issue
of ordinary shares for cash.

Required:
Prepare the statement of cash flows for Oshodi Nigeria Limited for the year ended May 31, 2017, using the indirect method according to IAS 7.

Answer

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Tags: Financing Activities, Indirect Method, Investing Activities, Operating Activities, Statement of Cash Flows
Level: Level 1

Topic: Statement of Cash Flows (IAS 7)
Series: NOV 2018

FA – Nov 2014 – L1 – SB – Q6b – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Preparing the statement of cash flows (indirect method) showing cash generated from operating activities.

Question

The financial data extracted from the books of Solomon Enterprises Limited for the year ended 31 December 2013 are as follows:

Particulars	N’000
Sales	55,924
Cost of sales	41,028
Selling and distribution expenses	2,748
Administration expenses	2,404
Interest expenses	1,528
Tax paid	1,584
Increase in inventories	11,868
Decrease in receivables	1,416
Increase in payables	4,944

Additional information:
Included in administration expenses are:
i. Depreciation charges for the year of N500,000
ii. Loss on disposal of assets of N48,000

Required:
Prepare the Statement of Cash Flows showing cash flow generated from operating activities using the indirect method. (11 Marks)
Show all workings.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cash Flow from Operations, Cash Flow Statement, IAS 7, Indirect Method
Level: Level 1

Question Tag: Indirect Method

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Compare the direct and indirect methods of preparing a statement of cash flows.

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Prepare a statement of cash flows for Oshodi Nigeria Ltd using the indirect method and IAS 7.

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Preparing the statement of cash flows (indirect method) showing cash generated from operating activities.

You're reporting an error for "FA – Nov 2014 – L1 – SB – Q6b – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)"

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Prepare a consolidated cash flow statement for Feedme Limited using the indirect method.

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Prepare the statement of cash flows for Odibeze Nigeria PLC for the year ended April 30, 2021, using the indirect method, and explain the term cash and cash equivalents.

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Preparation of statement of cash flows using indirect method and explanation of benefits of published cash flow statements to users.

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Prepare a statement of cash flows using the indirect method and reconcile cash equivalents with the statement of financial position.

You're reporting an error for "FR – May 2018 – L2 – Q3 – Statement of Cash Flows (IAS 7)"

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Prepare the statement of cash flows for Babafrayo Nig. Ltd. using the indirect method and calculate the net cash flow from operating activities using the direct method.

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You're reporting an error for "FR – May 2019 – L2 – Q2a and Q2b – Presentation of Financial Statements (IAS 1)"

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Prepares the statement of cash flow for Uwana Manufacturing Limited using the indirect method.

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Compare the direct and indirect methods of preparing a statement of cash flows.

You're reporting an error for "FR – Nov 2018 – L2 – SA – Q1b – Statement of Cash Flows (IAS 7)"

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Prepare a statement of cash flows for Oshodi Nigeria Ltd using the indirect method and IAS 7.

You're reporting an error for "FR – Nov 2018 – L2 – SA – Q1a – Statement of Cash Flows (IAS 7)"

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Preparing the statement of cash flows (indirect method) showing cash generated from operating activities.

You're reporting an error for "FA – Nov 2014 – L1 – SB – Q6b – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)"

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