Exam 10: Statement of Cash Flows

What is included in "cash and cash equivalents"?

Reuse It Inc.'s activities for the year ended December 31, 2022 included the following: • Comprehensive income totaled $468,000 including $88,000 in other comprehensive income. • Paid a cash dividend of $30,000 that was declared in 2021. • Interest expense for the year was $14,000; the opening and closing balances in the interest payable account were $28,000 and $19,000, respectively. • Accounts receivable increased $63,000 and accounts payable decreased $19,000 during the year. • RII paid $51,000 cash for equipment. • RII sold an investment at amortized cost for $36,000. The book value of the investment was $39,000. • Depreciation expense for the year totaled $9,000. • Suffered an impairment loss on patents of $1 0,000. • Declared and issued a 2-for-l stock split. There were 20,000 ordinary shares outstanding before the split with a collective market value of $3,000,000. Required: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method, assuming that the company's policy is to report interest and dividends received as an investing activity, and interest and dividends paid as a financing activity.

What is cash management?

A company's activities for the year ended December 31, 2021 included the following: • Sold an investment at FVPL for $10,000. The investment was held for trading purposes. The book value was $15,000. • Sold an Investment at FVOCI for $10,000. The original cost was $5,000. Using the indirect method, how much would be presented as cash flow from operating activities?

Financial information for Fesone Inc.'s balance sheet for fiscal 2020 and 2021 follows: Additional information: 1. Preferred shares were converted to common shares during the year at their book value. 2. The face value of the bonds is $200,000; they pay a coupon rate of 6% per annum. The effective interest rate of interest is 8% per annum. 3. Net income was $290,000. 4. There was an ordinary stock dividend valued at $12,000 and cash dividends were also paid. 5. Interest expense for the year was $130,000. Income tax expense was $116,000. 6. Fesone arranged for a $200,000 bank loan to finance the purchase of the investment at amortized cost. 7. Fesone has adopted a policy of reporting cash flows arising from the payment of interest and dividends as operating and financing activities, respectively. 8. The investment at FVPL is held for trading purposes. Required: a. Prepare a statement of cash flows for the year ended December 31, 2021 using the indirect method. b. Discuss how the transaction(s)above that are not reported on the statement of cash flows are reported in the financial statements.

Which statement is correct?

Which of the following is an investing activity?

What are the options for recording interest and dividends received and interest and dividends paid on the cash flow statement according to Accounting Standards for Private Enterprises (ASPE)?

Answer the following: a. What are the similarities and differences between the direct and indirect methods of preparing the statement of cash flows? b. In practice, which method of preparation is used for the statement of cash flows and why? c. Is the indirect method of presenting the statement of cash flows required by the IASB? d. Briefly discuss how unrealized gains and losses arising from an investments at FVPL that are held for trading purposes are reported on the statement of cash flows.

Which statement is correct?

A company's activities for the year ended December 31, 2021 included the following: • Declared and issued a stock dividend valued at $50,000. • Paid $975,000 to repurchase bonds at amortized cost. The book value of the bonds was $1,000,000. • Made a $20,000 principal payment on a bank loan. How much will be presented as cash flow from financing activities?

George Corp.'s policy is to report all cash inflows from interest and dividends in the investing section and cash outflows arising from interest and dividends in the financing section. Angela's activities for the year ended December 31, 2019 included the following: • Declared a $12,000 cash dividend payable on January 15, 2020. • Acquired the right to use an automobile costing $30,000 under a lease agreement. • Declared and issued a stock dividend valued at $15,000. • Issued $330,000 in ordinary shares. • Accounts payable increased $18,000 during the year. • Paid $980,000 to repurchase bonds. The book value of the bonds was $1,010,000. • Made a $15,000 principal payment on a bank loan. • Interest expense for the period was $8,000. The interest payable account increased $2,000. Required: a. Prepare the cash flows from financing activities section of the statement of cash flows. b. Identify how the activities listed above that are not financing activities would be reported in the statement of cash flows assuming that the statement is prepared using the indirect method.

Which item will be presented on the "investing section" of the cash flow statement?

How is other comprehensive income (OCI)shown on the Statement of Cash Flows (SCF)?

Which statement is correct?

Tub Time Corp.'s policy is to report all cash flows arising from interest and dividends in the operating activities section. Tub Time's activities for the year ended December 31, 2021 included the following: • 2021's net income after taxes totaled $220,000. • Declared and issued a stock dividend valued at $40,000. • Accounts receivable decreased $44,000 in 2021. • Sold a investment at FVPL for $13,000. The book value was $11,000. (Assume this investment at FVPL was held for trading purposes.) • Interest revenue for the period was $6,000. The interest receivable account decreased $4,000. • Declared a $10,000 dividend payable. The dividends payable account decreased $19,000 in 2021. • Sold an investment at FVOCI for $9,000. The original cost of the investment was $14,000. • Tub Time recorded a $15,000 goodwill impairment loss during the year. • Depreciation expense for the year was $14,000. Required: a. Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. b. Identify how the activities listed above that are not operating activities would be required in the statement of cash flows.

Explain how the following transactions should be reported in the statement of cash flows, assuming the indirect method is used to determine cash flows from operating activities. Identify all available options. If not reported on the statement of cash flows, indicate the disclosure requirements, if any. 1. Income tax expense of $30,000. The income tax payable account increased $7,000, while the deferred income tax liability account decreased $9,000. 2. Cash dividend of $40,000 declared. The dividends payable account increases $25,000.

Complete the following: a. List the three primary sources of information required to prepare a statement of cash flows. b. A company may report its accounts receivable at the gross amount less an allowance for bad debts. Contrast the direct and indirect methods of adjusting for accounts receivable reported at the gross amount. c. Briefly discuss how cash flows arising from the purchase and sale of treasury shares are reported on the statement of cash flows. d. Briefly discuss how other comprehensive income is reported on the statement of cash flows. e. Briefly discuss how cash flows arising from investments in associates are reported on the statement of cash flows. f. Briefly discuss the alternatives for reporting discontinued operations in the statement of cash flows.

Which statement about "cash and cash equivalents" is correct?

The Company's activities for the year ended December 31, 2021 included the following: • Income tax expense for the year was $30,000. • Sales for the year were $650,000. • Accounts payable decreased $10,000 in 2021. • Selling and administration expenses for the year totaled $200,000. • Accounts receivable increased $20,000 in 2021. • The Company's cost of goods sold in 2021 was $325,000. • The Company's inventory decreased $15,000 during the year. What is the cash receipts from customers under the direct method?