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  • 20 Marks

CR – Nov 2018 – L3 – SB – Q4 – Statement of Cash Flows (IAS 7)

Preparation of Happy Plc’s statement of cash flows and analysis of revaluation and financing adjustments.

Happy is a publicly listed company. Its financial statements for the year ended July 31, 2017, including comparatives, are shown below:

Notes:

  1. On November 1, 2016, Happy acquired an additional plant under a finance lease with a fair value of ₦3 million. The property was also revalued upward by ₦4 million, with ₦1.3 million of the revaluation reserve transferred to deferred tax. No disposals occurred during the period.
  2. Depreciation on property, plant, and equipment amounted to ₦1.8 million, and amortization of deferred development expenditure was ₦0.4 million.

Required:

Prepare the statement of cash flows of Happy Plc for the year ended July 31, 2017, in accordance with IAS 7, using the indirect method. (20 Marks)

 

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  • 9 Marks

FR – Nov 2022 – L2 – Q2 – Statement of Cash Flows

Prepare a statement of cash flows using the direct method for Obudu Nigeria Limited based on the given financial statements.

Financial statements and extract from the cashbook of Obudu Nigeria Limited for the year ended December 31, 2020 are summarised below:
Obudu Nigeria Limited Statement of profit or Loss for the year ended December 31, 2020

Obudu Nigeria Limited Statement of financial position as at December 31



Other Information
(i) The 8% loan notes have been partly redeemed. It is expected that the full redemption will be made in five years time.
(ii) A cash payment for insurance of N1million was omitted in the cash book and other records.
(iii) The investments are not easily realisable.
Required:
a. Prepare the statement of cash flows for the year ended December 31, 2020 using the direct method in accordance with IAS 7. (9 Marks)
b. Prepare a statement of reconciliation of the operating profit to cash flow from operations. (5 Marks)
c. Discuss the benefits of statement of cash flows information to users of financial statements.

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  • 20 Marks

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.

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)

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  • 20 Marks

FR – Dec 2022 – L2 – Q3 – IAS 7 Statement of Cash Flows

Prepare Dompa Ltd.'s statement of cash flows for the year ended 31 December 2021, using the indirect method based on the IAS 7 framework.

Dompa Ltd prepares its financial statements in accordance with IFRSs. Below are the statement of profit or loss for the year ended 31 December 2021 and the statement of financial position as at that date, and the comparative statement of financial position as at 31 December 2020.

Statement of Profit or Loss for the year ended 31 December 2021

Description GH¢’000
Revenue 1,656,000
Cost of sales (745,200)
Gross profit 910,800
Other income 15,000
Admin expenses (409,860)
Distribution costs (136,620)
Profit before interest & tax 379,320
Finance cost (3,232)
Profit before tax 376,088
Tax expense (9,462)
Profit for the year 366,626

Statement of Financial Position as at 31 December

Description 2021 (GH¢’000) 2020 (GH¢’000)
Non-current assets:
Property, Plant & Equipment 33,210 23,260
Investment Property 28,500 28,000
Intangible Assets 124 155
Total Non-Current Assets 61,834 51,415
Current assets:
Inventory 15,700 5,680
Trade Receivables 82,800 10,765
Cash 16,712 152
Bank 304,437 5,950
Total Current Assets 419,649 22,547
Total Assets 481,483 73,962
Equity & Liabilities:
Equity:
Share capital 30,000 25,000
Retained earnings 373,526 11,300
Revaluation surplus 862 1,262
Total Equity 404,388 37,562
Non-current liabilities:
15% bond redeemable in 2024 20,432 20,200
Deferred tax 3,762 2,300
Current liabilities:
Trade & other payables 46,401 7,600
Current tax 6,500 6,300
Total Equity & Liabilities 481,483 73,962

Additional Information:

i) Depreciation expense on tangible non-current assets recognised for the year is GH¢8,804,000.
ii) An impairment review has been undertaken on one of the machines of the company that has a carrying value of GH¢1,500,000, but an estimated recoverable amount at the impairment review date was GH¢745,000.
iii) One of the company’s vehicles was involved in an accident in the year and was written off with a carrying value of GH¢562,000.
iv) The company sold a machine for GH¢850,000 with a carrying value of GH¢689,000.
v) The company also issued a 15% bond in January 2020 at a par value of GH¢20,000 with a tenure of 5 years.
vi) The company realized GH¢400,000 in revaluation surplus through excess depreciation charges.

Required:
Using IAS 7: Statement of Cash Flows, prepare the statement of cash flow for Dompa Ltd for the year ended 31 December 2021.

 

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  • 20 Marks

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.

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:

  1. 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.
  2. Non-current asset investments costing N38,000 were sold during the year for N31,500.
  3. Dividends received during the year amounted to N7,500. Dividends paid during the year totaled N150,000.
  4. The 14% loan notes were redeemed in January 2017, and 12% loan notes were issued in July 2017.
  5. The company issued N75,000 ordinary shares at a premium of 60 kobo per share in January 2017.
  6. 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)

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  • 1 Marks

FA – Nov 2015 – L1 – SA – Q10 – Elements of Financial Statements

This question calculates the net cash flow from investing activities for Alaye Enterprises.

What is the net cash flow from investing activities of Alaye Enterprises for the year ended December 31, 2014?
A. N440,000
B. N450,000
C. N(440,000)
D. N(450,000)
E. N460,000

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  • 25 Marks

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.

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.

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  • 20 Marks

FA – May 2023 – L1 – SB – Q2 – Financial Statements Preparation

Preparation of a statement of cash flows for Samu PLC using the indirect method.

Samu PLC is a listed company. The following financial statements of the company are available:

Statement of Profit or Loss for the Year Ended December 31, 2018:

N’m
Revenue 6,740
Cost of Sales (4,840)
Gross Profit 1,900
Income from Investment Property 60
Distribution Costs (120)
Administrative Expenses (350)
Finance Costs (50)
Profit Before Tax 1,440
Income Tax Expense (160)
Profit After Tax for the Year 1,280

Statement of Financial Position as at December 31:

2018 (N’m) 2017 (N’m)
Non-Current Assets:
Plant and Equipment 2,880 1,860
Investment Property 420 400
Current Assets:
Inventory 1,210 810
Trade Receivables 480 590
Bank 1,010 –
Total Assets 6,000 3,660
Equity:
Equity Share Capital of N0.50 each 2,000 600
Share Premium 750 50
Retained Earnings 1,440 1,310
Non-Current Liabilities:
8% Loan Notes 250 430
Current Liabilities:
Trade Payables 1,410 1,050
Bank Overdraft – 120
Income Tax Payable 150 100
Total Liabilities and Equity 6,000 3,660

Additional Information:

  1. An item of plant with a carrying amount of N240 million was sold at a loss of N90 million during the year. Depreciation of N280 million was charged on property, plant, and equipment in the year ended December 31, 2018. There were no sales of investment property during the year.
  2. Part of the 8% loan notes was redeemed during the year.
  3. There was an issue of shares for cash on June 1, 2018.
  4. Dividend was paid on September 1, 2018.

Required:

Prepare a statement of cash flows for Samu PLC for the year ended December 31, 2018, in accordance with IAS 7 Statement of Cash Flows, using the indirect method. (Total 20 Marks)

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  • 1 Marks

FA – May 2016 – L1 – SA – Q20 – Regulatory Environment of Accounting

Identifying which activity is not an investing activity under IAS 7.

Which of the following will NOT be regarded as an investing activity in relation to IAS 7 statement of cash flows?
A. Dividend received
B. Cash paid to acquire property, plant and equipment
C. Cash paid to acquire equities in other entities
D. Cash payment to supplier of goods and services
E. Proceeds from sale of property, plant and equipment

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  • 20 Marks

FA – May 2015 – L1 – Q6 – Financial Statements Preparation

Prepare a statement of cash flows using the direct method for the year ended 31 December 2014 with given financial data.

Financial data extracted from the books of Kandor Enterprises Limited for the year ended 31 December 2014 are shown below:

Details N’000
Revenue 6,990
Decrease in receivables 177
Cost of sales 5,128
Increase in inventories 1,483
Increase in payables 613
Selling and distribution expenses 300
Administrative expenses 343
Loss on disposal of non-current assets 6
Depreciation charges for the year 62
Ordinary shares issued for cash 400
Purchase of property, plant, and equipment 113
Income tax paid 198
Proceeds from disposal of non-current assets 3
Repayment of loan notes 10
Dividend paid 86
Interest paid on loan notes 191
Cash and cash equivalent at the beginning of the year (409)

Required:
Prepare the Statement of Cash Flows for the year ended 31 December 2014 using the direct method, showing:
a. Net cash flow from operating activities (5 Marks)
b. Net cash flow from investing activities (5 Marks)
c. Net cash flow from financing activities (5 Marks)
d. Cash and cash equivalents at the end of the year (5 Marks)

Show all workings.

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  • 20 Marks

FR – May 2017 – L2 – Q3 – Preparation of Financial Statements

Prepare a statement of cash flows for Haruna Ltd for the year ended 31 March 2017.

The following information has been taken from the financial statements of Haruna Ltd, a listed company for the year ended 31 March 2017:

Statement of Profit or Loss and Other Comprehensive Income (extracts) for the year ended 31 March 2017:


Additional information:

i) During the year, Haruna Ltd issued both ordinary shares and redeemable preference shares for cash.

ii) Investments classified as current assets are held for the short term and are readily convertible into the stated amounts of cash on demand.

iii) During the year, Haruna Ltd sold plant and equipment with a carrying amount of GH¢840,500 for GH¢900,000. Total depreciation charges for the year amounted to GH¢1,100,000. Plant costing GH¢50,000 was purchased on credit, and the amount is included within trade and other payables.

iv) Trade and other payables include accrued interest of GH¢5,000 as at 31 March 2017 (2016: GH¢10,000).

v) Intangibles relate to development costs capitalised in accordance with IAS 38 Intangible Assets. Costs amounting to GH¢70,000 were capitalised during the year.

Required:
Prepare a Statement of Cash Flows for Haruna Ltd for the year to 31 March 2017 in accordance with IAS 7 Statement of Cash Flows.

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  • 16 Marks

FR – Nov 2018 – L2 – Q3a – Preparation of Financial Statements

Preparation of the statement of cash flows using the indirect method based on the financial statements of Conso Bank Ghana Ltd.

The following financial statements relate to Conso Bank Ghana Limited for the year ended 31 December 2017:

Statement of Comprehensive Income for the year ended 31 December 2017

Description Note GH¢’000
Interest income (iii) 364,524
Interest expense (iv) (107,571)
Net interest income 256,953
Fees and commission income 132,374
Fees and commission expense (24,183)
Net fees and commission income 108,191
Other income (v) 9,727
Operating income 374,871
Impairment charge on loans and advances (93,492)
Operating expenses (vi) (169,317)
Profit before tax 112,062
Income tax expense (33,617)
Profit for the year 78,445

Statement of Financial Position as at 31 December 2017

Description Note 2017 (GH¢’000) 2016 (GH¢’000)
Assets
Cash and cash equivalents 577,767 752,303
Government securities 2,037,292 1,857,337
Advances to banks 214,875 107,407
Loans and advances to customers 1,190,782 1,145,133
Property and equipment (vii) 139,889 123,936
Intangible assets (viii) 18,131 12,162
Income tax asset 6,626 5,778
Total assets 4,185,362 4,004,056
Liabilities
Deposits from customers 3,368,406 3,078,071
Other liabilities and provisions 171,718 359,192
Total liabilities 3,540,124 3,437,263
Equity
Stated capital 100,000 100,000
Retained earnings 545,238 466,793
Total equity 645,238 566,793
Total liabilities and equity 4,185,362 4,004,056

Required:
Using the indirect method, prepare a statement of cash flows for the year ended 31 December 2017, in accordance with IAS 7: Statement of Cash Flows.
(16 marks)

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  • 20 Marks

FA – Nov 2023 – L1 – Q4 – IAS 7: Statement of cash flows

Prepare a statement of cash flows for Oti Ltd for the year ended 31 March 2022, including a discussion on cash equivalents.

Extracts from the financial statements for Oti Ltd for the year ended 31 March 2022 are as follows:

Statement of Profit or Loss for the year ended 31 March 2022

Description Amount (GHȼ)
Profit from operations 752,960
Interest payable (60,420)
Profit before tax 692,540
Income tax (210,400)
Profit for the year 482,140

Statements of Financial Position as at 31 March

Description 2022 (GHȼ) 2021 (GHȼ)
Non-current assets
Property, plant, and equipment 1,480,000 1,297,570
Current assets
Inventories 440,000 295,000
Trade receivables 385,840 197,750
Bank – 4,120
Total assets 2,305,840 1,794,440
Equity and liabilities
Share capital 640,800 540,200
Retained earnings 641,340 301,200
Non-current liabilities
10% Loan note 604,200 604,200
Current liabilities
Trade payables 154,700 150,300
Income tax payable 204,600 198,540
Bank overdraft 60,200 –
Total equity and liabilities 2,305,840 1,794,440

Additional information:

i) The depreciation charged for the year was GHȼ200,000.
ii) Dividends of GHȼ142,000 were paid during the year.
iii) During the year, plant with an original cost of GHȼ450,000 and a carrying amount at the date of disposal of GHȼ315,000 was sold for GHȼ412,000, which was received in cash.

Required:

a) In accordance with IAS 7: Statement of Cash Flows, prepare a Statement of Cash Flows for Oti Ltd for the year ended 31 March 2022. (18 marks)
b) Explain what is meant by the term ‘cash equivalents’ in relation to cash flow statements. (2 marks)

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  • 20 Marks

FA – Aug 2022 – L1 – Q4 – IAS 7: Statement of cash flows | Interpretation of financial statements (Financial Ratios)

Preparation of a Statement of Cash Flows using IAS 7, including cash flows from operating, investing, and financing activities, with an analysis of the benefits of preparing cash flow statements.

a) The following information relates to the activities of Chemu Ltd:

Statement of Financial Position as at 31 December

Account 2021 (GHȼ’000) 2020 (GHȼ’000)
Assets
Non-current assets 1,295 810
Current assets
Inventory 1,500 500
Receivables 2,680 890
Bank – 740
Total assets 5,475 2,940
Equity and liabilities
Equity
Share capital 600 400
Retained earnings 1,625 600
Total equity 2,225 1,000
Non-current liabilities
10% Debentures 160 360
Current liabilities
Bank overdraft 1,810 –
Payables 1,000 680
Taxation 280 900
Total liabilities 3,250 1,940
Total equity and liabilities 5,475 2,940

Additional information:

i) The Statement of Profit or Loss for the year ended 31 December 2021 shows the following:

Account Amount (GHȼ’000)
Operating profit 1,531
Interest payable (26)
Profit before taxation 1,505
Taxation (480)
Profit for the period 1,025

ii) Payables consist of trade payables and accrued interest. The accrued interest as at 31 December 2021 was GHȼ45,000 and as at 2020 was GHȼ80,000.

iii) Profit before taxation had been arrived at after charging GHȼ395,000 for depreciation on non-current assets.

iv) During the year, non-current assets with a carrying amount of GHȼ200,000 were sold for GHȼ190,000.

Required:
Prepare a Statement of Cash Flows for Chemu Ltd for the year ended 31 December 2021, in accordance with IAS 7: Statement of Cash Flows.
(16 marks)

b) Identify FOUR (4) benefits Chemu Ltd may derive from preparing a Statement of Cash Flows.
(4 marks)

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  • 20 Marks

FA – May 2016 – L1 – Q4 -Preparation of financial statements of a sole trader | IAS 7: Statement of cash flows

Prepare an adjusted cash book, a bank reconciliation statement, and discuss the benefits of reconciling cash book and bank statement balances.

The Statements of Financial Position for the last two years for AO Ltd are shown below. AO Ltd implemented an expansion programme during the year ended 31st May 2015.

Additional information:
i) The total depreciation provision incorporated in the statements of financial position was GH¢48,000 at 31st May 2014 and GH¢122,000 at 31st May 2015.
ii) During the year ended 31st May 2015, a non-current asset costing GH¢22,000 with a carrying amount of GH¢6,000 was sold for GH¢1,000. No other disposals took place.
iii) The revaluation surplus represents a revaluation of premises during the year ended 31st May 2015.

Required:
a) Prepare a Statement of Cash Flows for AO Ltd for the year ended 31st May 2015 in accordance with IAS 7. (Use the indirect method). (12 marks)
b) State the effects of the expansion policy on AO Ltd. (8 marks)

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