Question

Kingdom is a public listed manufacturing company. Its draft summarised financial statements for the year ended 30 September 2013 (and 2012 comparatives) are: Statements of profit or loss and other comprehensive income for the year ended 30 September: 2013 2012 $’000 $’000 Revenue 44,900 44,000 Cost of sales (31,300) (29,000) ––––––– ––––––– Gross profit 13,600 15,000 Distribution costs (2,400) (2,100) Administrative expenses (7,850) (5,900) Investment properties – rentals received 350 400 – fair value changes (700) 500 Finance costs (600) (600) ––––––– ––––––– Profit before taxation 2,400 7,300 Income tax (600) (1,700) ––––––– ––––––– Profit for the year 1,800 5,600 Other comprehensive income (1,300) 1,000 ––––––– ––––––– Total comprehensive income 500 6,600 ––––––– ––––––– Statements of financial position as at 30 September: 2013 2012 $’000 $’000 $’000 $’000 Assets Non-current assets Property, plant and equipment 26,700 25,200 Investment properties 4,100 5,000 ––––––– ––––––– 30,800 30,200 Current assets Inventory 2,300 3,100 Trade receivables 3,000 3,400 Bank nil 5,300 300 6,800 –––––– ––––––– –––––– ––––––– Total assets 36,100 37,000 ––––––– ––––––– Equity and liabilities Equity Equity shares of $1 each 17,200 15,000 Revaluation reserve 1,200 2,500 Retained earnings 7,700 8,700 ––––––– ––––––– 26,100 26,200 Non-current liabilities 12% loan notes 5,000 5,000 Current liabilities Trade payables 4,200 3,900 Accrued finance costs 100 50 Bank 200 nil Current tax payable 500 5,000 1,850 5,800 –––––– ––––––– –––––– ––––––– Total equity and liabilities 36,100 37,000 ––––––– ––––––– The following information is relevant: On 1 July 2013, Kingdom acquired a new investment property at a cost of $1·4 million. On this date, it also transferred one of its other investment properties to property, plant and equipment at its fair value of $1·6 million as it became owner-occupied on that date. Kingdom adopts the fair value model for its investment properties. Kingdom also has a policy of revaluing its other properties (included as property, plant and equipment) to market value at the end of each year. Other comprehensive income and the revaluation reserve both relate to these properties. Depreciation of property, plant and equipment during the year was $1·5 million. An item of plant with a carrying amount of $2·3 million was sold for $1·8 million during September 2013. Required: (a) Prepare the statement of cash flows for Kingdom for the year ended 30 September 2013 in accordance with IAS 7 Statement of Cash Flows using the indirect method.

Answer 1

A cash flow statement provides information about the changes in cash and cash equivalents of a business by classifying cash flows into operating, investing and financing activitiy.

statement of cash flow for year ended 30 sep 2013 $0.000 $0.000 cash flow from operating activity profit before tax 2400 adjustment for- finance cost 600 investment income -350 profit from operation 2650 depreciation 1500 loss on sale 500 increase in accrual 501 operating profit before we changes 4700 decrease in inventory 800 decrease in trade recievable 400 increase in trade payable 300 cash generated from operation 6200 interest paid(600-100) -550 tax paid (w1) net cash from operating activity 550 -5100 -3600 cash flow from investing activity purchase of non current assets proceeds from sale of assets ip 1800 -1450 -3250 cash flow from financing activity proceeds from share issue 22001 net increase and decrease in cash equaivalent (200+300) -5001

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