Question

E7.14 Cash Flow Statement Conversion The Luh Company's 2020 cash flow statement appears below. LO in its functional currency. New Taiwan dollars (NTS). NT$100.000 45,000 (4,000) 24,000 (32,000) 133,000 THE LUH COMPANY Statement of Cash Flows For Year Ended December 31, 2020 (in millions) Operating Activities Net income................. Depreciation and amortization expense. ... Gain on sale of long-term investments ......... Decrease in other current operating assets.... Decrease in current operating liabilities... Cash provided by operating activities ........ Investing Activities Acquisition of plant assets ....... Sale of long-term investments ...... Cash used in investing activities.. Financing Activities Retirement of long-term debt...... Issuance of common stock .... Dividends paid .......... Cash provided by financing activities..... Increase in cash ......... Cash balance, January 1, 2020 .......... Cash balance, December 31, 2020 ....... (85,000) 50,000 (35,000) (98,000) 170,000 (65,000) 7,000 105,000 210,000 NT$315,000

Answer 1

Conversion of Statement of Cash Flow into Dollars:

Particulars	NT$	Conversion Rate($/NT$)	Dollar ($)
Operating Activities
Net Income	100000	0.039	3900
Depreciation & Amortization Exp	45000	0.039	1755
Gain on sale of Long Term Investments	(4000)	0.0394	(157.6)
Decrease in other current operating assets	24000	0.04	960
Decrease in current operating liabilities	(32000)	0.04	(1280)
Cash provided by operating activities	133000		5177.4
Investing Activities
Acquisition of plant assets	(85000)	0.0423	(3595.5)
Sale of long term investments	50000	0.0394	197
Cash used in investing activities	(35000)		(3398.5)
Financing Activities
Retirement of long term Debt	(98000)	0.0394	(3861.2)
Issuance of Common stock	170000	0.0423	7191
Dividends paid	(65000)	0.04	(2600)
Cash provided by financing activities	7000		729.8
Increase in cash	105000		2508.7
Effects of ex. Rate changes on cash (Balancing Figure)			956.3
Cash balance as on Jan 1, 2020	210000	0.042	8820
Cash balance as on Dec 31, 2020	315000	0.039	12285

Note: 1. Statement of profit & loss is not given so net income has been translated by using closing rate as on Dec 31, 2020; alternatively average rate may be used if properly explained.

2. Sale of long term investments has been converted by using the rate $0.0394/NT$; hence gain on sale of long term investments have also been converted by using the same rate.