Professional Documents
Culture Documents
2009 2008
(Rupees) (Rupees)
Cash Flow from Operating Activities
Profit before tax X X
Adjustments for: -
Depreciation x x
(Gain)/Loss on sale of fixed assets x (x)
Increase/(decrease) in provision for doubtful debts (x) (x)
Amortization of Government Grant (x) (x)
Amortization of deferred cost x x
Interest expense x x
Increase/(decrease) in provision for warranties x (x)
xx xx
Operating profit before working capital changes XX XX
Adjustment for working capital changes
(Increase)/Decrease in current assets
(Increase)/Decrease in inventory x x
(Increase)/Decrease in debtors (x) x
(Increase)/Decrease in prepayments x (x)
Increase/(Decrease) in current liabilities
Increase/(Decrease) in creditors x x
Increase/(Decrease) in accrued expenses (x) x
Working capital changes x x
Cash generated from operations XX XX
Less:
Interest paid (x) (x)
Taxes paid (x) (x)
Dividend paid (x) (x)
(x) (x)
Net cash inflow/(outflow) from operating activities –A (XXX) XXX
Direct Method
Receipts from customers x X
Payments to suppliers (x) (x)
Payments for expenses (x) (x)
XX XX
CONSOLIDATION OF STATEMENT OF CASH FLOWS
Investment in Subsidiary – The outflow made to Inflow from disposal – the consideration received for
acquire the subsidiary will be shown in Investing the equity share given up
Activities Will be shown in Investing Activities
Regarding the balances of assets, liabilities, & equity – Regarding the balances of assets, liabilities, & equity –
the balances of assets and liabilities appearing on the The subsidiary has been disposed off and the closing
date of acquisition of the subsidiary have been balances of assets and liabilities of group do not
incorporated into Group FS but these were purchased include subsidiary assets and liabilities but the opening
by subsidiary at the time when that was not part of balances of group does include subsidiary disposed
group. So these are not group cash outflows. off.
Additional Working Notes: Additional Working Notes:
Cost of Control
Disposal Account
Business Purchase Account
Business Sale Account
Impairment charged in
Investment in associate Goodwill P&L
B/F xxx xxx Cash B/F xxx xxx P & – Adjustment in cash flow
from operating activities
L
P&L xxx Dividend paid by associate
xxx C/D - Inflow in cash flow from xxx C/D
investing activities
Share of profit in P&L
- Adjustment in cash flow
from operating activities
PRACTICE QUESTIONS
Question #1 Investment acquired during the year
Following is the information concerning the Investor Group for the year ended
December 31, 20X3
Consolidated Income statement
20X3 20X3
Rs. Rs.
(000) (000)
Profit from operations
Group 16,600
Associates 980 17,580
Income tax expense
Group 7,900
Associates 420 (8,320)
Profit after tax 9,260
Non controlling interest (1550)
Group profit for the year 7,710
Consolidated statement of changes in equity
20X3
Rs.
(000)
Opening balance at 1-1-20X3 21,845
Profit for the year 7,710
Dividend paid (2,100)
New shares issued 2,000
29,455
Consolidated balance sheet
20X3 20X3 20X2 20X2
Rs. Rs. Rs. Rs.
(000) (000) (000) (000)
Non-current assets
Investment in associates 6,200 5,700
Goodwill on acquisition 680 280
Property, plant and 21,200 28,080 16,900 22,880
equipment
Current assets
Inventories 16,600 12,200
Receivables 15,000 9,300
Cash 50 31,650 1,445 22,945
59,730 45,825
Capital and reserves
Issued capital 14,000 13,000
Share premium 2,645 1,645
Accumulated profits 12,810 29,455 7,200 21,845
Non controlling interest 8,200 6,600
Long term loans 1,655 5,280
Current liabilities
Trade payables 7,700 5,800
Taxation 9,100 4,900
Bank overdraft 3,620 20,420 1,400 12,100
59,730 45,825
Notes
1 On July 01, 20X3 the Investor Group acquired 80% of the issued share
capital of Vulnerable Limited, whose net assets at the date were as
follows:
Rs.
(000)
Property, plant and equipment 2,600
Inventories 900
Receivables 980
Cash 200
Trade payables (1,380)
Tax (300)
3,000
Following is the information concerning the JCN Group for the year ended
December 31, 20X0
Consolidated Income statement
20X0
Rs. (000)
Profit from operations
Group 20,000
Finance cost (1,400)
Gain on disposal 700
Profit before tax 19,300
Tax expense (6,500)
Profit after tax 12,800
Non controlling interest (1,000)
Group profit for the year 11,800
Consolidated statement of changes in equity
20X0
Rs. (000)
Opening balance at 1-1-20X0 49,500
Profit for the year 11,800
Dividend paid (3,000)
58,300
W-3 NCI
b/f 6,600
Dividend 550 P&L 1,550
c/f 8,200 B.P. 1,600
8,700 8,700
W-4 CRE
b/f 7,200
Dividend 2,100 P&L 7,710
c/d 12,810
_____ _____
14,910 14,910
W-5 Goodwill
b/f 280
COC 400 c/f 680
___ ___
680 680
W-6 PPE
b/f 16,900 Dep. 2,200
B.P. 2,600
Cash 3,900 c/d 21,200
23,400 23,400
W-7 Inventories
b/f 12,200
B.P. 900
Cash 3,500 c/d 16,600
16,600 16,600
W-8 Receivables
b/f 9,300
B.P. 980
Cash 4,720 c/d 15,000
15,000 15,000
E-2
JCN GROUP
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED JUNE 30, 20X0
Cash flow from operating activities Rs.(000)
Profit before tax 19,300
Adjustment for: Rs. (000)
Gain on disposal (700)
F. Cost 1,400
Depreciation 10,100 10,800
O. Profit before W.C. Changes 30,100
Working capital changes
Inventory (4,000)
Receivable (4,500)
Payable 3,750 (4,750)
25,350
Taxes paid (5,200)
Cash flow generated from Operating activities 20,150
Cash flow from investing activities
Sub. Company disposal (5500 + 200) 5,700
P.P. E. Acquired (15,450) 9,750
9,750
W-1 Disposal
Rs. Rs.
Net Assets 6,000 Cash 5,500\
P&L 700 NCI 1,200
____ ____
6,700 6,700
W-3 CRE
Dividend 3,000 b/f 29,500
c/d 38,300 PAT 11,800
40,300 40,300
W-4 NCI
Disposal 1,200 b/f 5,750
Dividend 500 PAT 1,000
c/d 5,050 ____
6,750 6,750
W-5 PPE
b/f 50,000 B.S. 4,000
Dep. 10,100
Cash 15,450 c/d 51,350
65,450 65,450
W-6 Inventory
b/f 23,000 B.S. 2,000
Cash dividend 4,000 c/d 25,000
27,000 27,000
W-7 Receivables
b/f 19,000 B.S. 2,500
Cash 4,500 c/d 21,000
23,500 23,500
Deferred tax 75 55
Current Liabilities
Running finance 940 900
Trade payables 950 720
Income tax payable 600 450
Dividends payable 180 100
2,670 2,170
TOTAL EQUITY AND LIABILITIES 7,253 6,375
Following further information has been extracted from the records:
(i) Iqbal Limited has two subsidiaries i.e. Faiz Limited and Badar Limited.
(ii) The factory buildings of Faiz Limited and Badar Limited were
revalued during the year and the surplus arising on the revaluation
was credited to a revaluation reserve account.
(iii) Certain plant and machineries belonging to Faiz Limited, acquired
under finance lease arrangement, were capitalized at Rs. 50 million.
(iv) On September 30, 2006, equipment costing Rs. 55 million carried in
the books of Iqbal Limited at Rs. 35 million as at June 30, 2006 was
completely destroyed by fire. Insurance proceed of Rs. 40 million was
received on November 17, 2006. There was no other disposal of
tangible fixed assets in any of the three companies.
(v) Total depreciation in the consolidated profit and loss account
amounted to Rs. 314 million which included depreciation on leased
assets amounting to Rs. 38 million.
(vi) 80% of the paid-up capital of Faiz Limited was acquired during the
year for Rs. 110 million. The payment was made by issuing 5.5 million
ordinary shares of Rs. 10 each at 100% premium. The net assets of
Faiz Limited at the date of acquisition were as follows:
Rs. in
million
Tangible fixed assets 60
Inventories 20
Trade receivables 25
Cash 10
Trade payables (25)
90
vii) Provision made during the year, for current and deferred tax
amounted to Rs. 200 million and Rs. 20 million respectively.
(viii) Profit allocated to minority shareholders amounted to Rs. 35 million.
(ix) The details relating to dividend paid by Iqbal Limited for the year are
as follows:
2007 2006
Declared on June 15, 2007 June 15, 2006
Paid on August 31, 2007 August 31, 2006
Amount Rs. 180 million Rs. 100 million
Required:
Prepare the consolidated cash flow statement for the year ended June 30, 2007.
Show necessary workings.
Q-2
The following balances were extracted from the Consolidated Income
Statement and Consolidated Statement of Financial Position of Karachi Group
Limited for the year ended June 30, 2010.
2010
Rs. (m)
Operating profit 189
Share of profit from associate 5
Financial charges (14)
Profit before tax 180
Taxation (65)
Profit for the year 115
Attributable to: -
Owners of the parent 100
Non-controlling interest 15
115
Rs. In Millions
Property, plant and equipments 20.50
Inventories 10.00
Trade debtors and other receivables 8.00
Cash and bank 6.00
Trade creditors and other payables (17.00)
27.50
It is KGL’s policy to value the non controlling interest at its proportionate
share of fair value of the subsidiaries net assets.
ii) Book value of intangible assets on July 01, 2009 included trademark of Rs.
6 million. There was 50% impairment in the value of trademarks during the
year ended June 30, 2010.
iii) The following information pertaining to property, plant and equipment is
available: -
Total depreciation charge for the year was Rs. 70 million
A machine costing Rs. 10 million and having book value of Rs. 6.5
million was traded in with another machine having fair value of Rs.
7 million with an additional cash payment of Rs. 1 million
Fully depreciated assets costing Rs. 10 million were scrapped
during the year.
Proceed of a long term loan amounting to Rs. 5 million were
specifically used for purchase of property, plant and equipment.
iv) On August 5, 2010 the board of directors proposed a final dividend at
20% for the year ended June 30, 2010 (2009 15% dividend declared on
August 10, 2009)
Required:
Prepare a consolidated statement of cash flows under the indirect method for
the year ended June 30, 2010 including notes thereto as required by IAs 7.
Q-3
Alpha Pakistan Limited (APL) is a listed company and has 60% holding in Bravo
Limited (BL). The company is in the process of preparation of its consolidated
financial statements for the year ended 30 September 2011. Following are the
extracts from the information that has been gathered so far:
Consolidated Statement of Comprehensive Income (Draft) 2011
Rs. in
million
Sales 65,000
Cost of products sold (59,110)
Other operating income 2,000
Operating expenses (3,000)
Financial expenses (890)
Income tax expense (1,200)
Profit for the year 2,800
Profit attributable to
Owners of the holding company 2,500
Non-controlling interest 300
2,800
Non-current liabilities
Loans from banks 5,000 3,000 Current assets
Deferred tax 1,500 1,050 Inventories 4,700 4,350
Trade and other
receivables 3,900 3,300
Current liabilities Cash and bank 2,100 1,400
Trade and other
payables 8,000 7,250
Income tax 3,875 3,525
Accrued interest 125 75
61,650 49,200 61,650 49,200
* Include revaluation reserve
Consolidated statement of comprehensive income for the year ended 31
December 2014
Rs. in
million
Revenue 20,900
Operating expenses (11,550)
Profit from operations 9,350
Gain on disposal of subsidiary 1,000
Finance cost (350)
Income from associates 1,150
Profit before taxation 11,150
Income tax expense (2,250)
Profit for the year 8,900
Other comprehensive income for the year
Re-measurement of post-employment benefits 2,000
Other comprehensive income from associates 500
Total comprehensive income 11,400
Profit attributable to:
Parent shareholders 7,950
Non-controlling interest 950
8,900
Total comprehensive income attributable to:
Parent shareholders 10,200
Non-controlling interest 1,200
11,400
Additional information:
i. During the year, MGC acquired 80% holding in Gomel Limited (GL)
against a cash consolidation of Rs. 15,000 million. On the date of
acquisition, the non-controlling interest’s holding was measured at its fair
value of Rs. 3,400 million. The fair value of net assets of GL at acquisition
comprised of the following:
Rs. in
million
Property, plant and equipment 12,800
Inventory 1,500
Trade and other receivables 2,400
Cash and bank 800
Loan from banks (400)
Trade and other payables (1,800)
Income tax (400)
14,900
ii. During the year, MGC also disposed of its 60% shareholdings in Stone
Limited (SL) and realized cash proceeds of Rs. 8,500 million. This subsidiary
had been acquired several years ago for Rs. 6,000 million. At acquisition,
the fair value of SL’s net assets and non-controlling interest was Rs. 7,300
million and Rs. 3,200 million respectively. On the date of disposal, the net
assets of SL had a carrying value in the consolidated statement of
financial position as follows:
Rs. in
million
Property, plant and equipment 7,250
Inventory 1,650
Trade and other receivables 1,500
Cash and bank 500
Loan from banks (300)
Trade and other payables (800)
9,800
iii. Property, plant and equipment:
Depreciation charge for the year is Rs. 3,850 million.
A plant having carrying value of Rs. 2,500 million was sold for Rs. 2,750
million. Gain on disposal has been credited to operating expenses.
On the basis of a professional valuation report, increase of Rs. 2,000
million has been recognized in the value of property, plant and
equipment.
iv. During the year Rs. 1,250 million was paid as final dividend to ordinary
shareholders.
Required:
Prepare consolidated statement of cash flow of MGC for the year ended 31
December 2014, using the indirect method. (22)
Q–5
Following are the extracts from consolidated financial statements of Musa
Limited (ML) for the year ended 30 June 2016: -
Consolidated statement of financial position as on 30 June 2016
2016 2015
Rs. (m) Rs. (m)
Assets
Goodwill 1,750 1,922
Investment in associates 4,100 3,528
Inventory 5,488 5,398
Trade and other receivables 4,659 4,107
Dividend receivable from associates 590 700
Other current assets 1,500 1,300
Cash and bank 4,500 3,710
b) During the year. ML sold entire 90% shareholding in Younas Limited (YL)
and realized cash proceeds of Rs. 800 million. This subsidiary had been
acquired several years ago for Rs. 560 million. At acquisition, the fair value
of YL’s net assets was Rs. 550 million. On the date of disposal, the carrying
value of YL’s net assets was Rs. 860 million as follows: -
Rs. (m)
Property, plant and equipment 725
Inventory 165
Cash and Bank balances 50
Trade and other payables (80)
860
Up to the date of disposal, 50% of YL’s goodwill has been impaired.
c) ML measured its non-controlling interest at the proportionate share of its
subsidiaries net identifiable assets.
Required: -
Determine the amounts to be shown in each of the following heads of accounts
in the consolidated cash flow statement for the year ended 30 June 2016.
Impairment of goodwill to be reported as non-cash item (03)
Dividend paid to non-controlling interest (04)
Dividend received from associates (2.5)
Net cash flow due to acquisition to subsidiary (1.5)
Net cash flows arising on disposal of subsidiary (1.5)
Changes in working capital (3.5)
SOLITIONS TO PAST PAPERS
A-1
IQBAL LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE, 2007
Increase / Decrease in
Liability:
Increase in
Payable 205
155
Cash generated from operations 1,137
Tax Paid (50)
Net cash inflows from Operating
Activities 1,087
Cash Flows from Investing Activities:
Investment (422)
Insurance
Proceed 40
Subsidiary Company
Acquired 10
Property, Plant & Eqipment (314)
Net Cash Outflow from Investing Activities (686)
Cash Floe from Financing Activities:
Preference Dividend Paid (48)
Dividend Paid (100)
Dividend - NCI (15)
Financing Lease (170)
Net Cash Outflow from Financing Activities (333)
W.1:
Tangible Asset
Rs. Rs.
Bal b/f 1927 Disposal 35
Revaluation
Reserve 140 Depreciation 314
Lease 50
Business Purchase 60
Cash 314
(200) (132)
W.4:
Finance Lease
Rs. Rs.
Cash 170 Bal b/d 420
Tangible Asset 50
Bal c/d 300
470 470
W.5:
Trade Receivables
Rs. Rs.
Bal b/f 1168 Decrease in Asset 65
Business Purchase 25
Bal c/d 1128
1193 1193
W.6:
Inventory A/c
Rs. Rs.
Bal b/f 1715
Increase in Asset 115
Business Purchase 20
Bal c/d 1850
1850 1850
W.7:
Profit before Tax:
PBT 625
Tax (220)
Profit After Tax 405
NCI (35)
Parent Co 370
Dividend (180)
Retained- Group 190
Bal b /f 2480
2,670
W.8:
NCI
Rs. Rs.
40 40
W.13:
Cost of Control A/c
Rs. Rs.
110 110
W.14:
Business Purchase A/c
Rs. Rs.
Payable 85 Tangible Asset 60
Cost of Control
A/c 72 Inventories 20
NCI 18 Receivables 25
Cash 10
175 115
A-2
Karachi Group Limited
Consolidated Statement of
Cash Flows For the year ended June 30, 2010
Rs. in
million
Cash flows from operating activities
Profit before tax 180.00
Adjustments for :
Share of profit in associates (5.00)
Depreciation 70.00
Trade mark impairment (6*50%) Loss on 3.00
exchange of machine (6.5+1)-7 0.50
Financial expenses 14.00
262.50
Increase in inventories (261-10-200) (51.00)
Increase in trade debtors and other receivables (180-8-162) (10.00)
Decrease in trade creditors and other payables (262-17-287) (42.00)
Cash generated from operating activities 159.50
Financial expenses paid* (5+14-8) (11.00)
Income taxes paid (50+65-60) (55.00)
Net cash from operating activities 93.50
*This may also be shown under financing activities
Rs. in million
Consideration paid in cash net of cash acquired (30-6) 24.00
During the year, the group acquired property, plant and equipment with an
aggregate cost of Rs. 86.5 million as detailed below:
A-3
Alpha Pakistan Limited
Consolidated statement of cash flows
For the year ended 30 September 2011
2001
Rs. in
million
Cash flows from operating activities
Cash receipts from customers W1 62,759
Cash paid to suppliers and for operating expenses W2 (61,827)
Cash generated from operations 932
Financial charges paid {(30+890-35)+(33-29)-(27-24) (886)
Income tax paid (10+25+1,200-210-200) (825)
Recoveries from employees against long term receivables (33-27) 6
Net cash from operating activities (773)
WORKINGS
W1: Cash receipts from customers
Sales for the year after elimination of inter-company sales (65,000-140) 64,860
Increase in trade debts (7,534-5,421)-(140x40%)+44 (2,101)
62,759
WORKINGS
W-1 Goodwill Impairment
Goodwill as on January 01, 2014 18,500
Add: goodwill of subsidiary acquired during the year 1.1 3,500
Less: goodwill of subsidiary disposed off during the year 1.1 (1,900)
Less: goodwill as on December 31, 2014 (19,300)
Impairment (balancing figure) 800
W1.1 Goodwill of acquired/disposed off subsidiaries
Gomel Stone
Cost of investment 15,000 6,000
NCI at fair value 3,400 3,200
FV of net assets (14,900) (7,300)
Goodwill at acquisition 3,500 1,900
W-2 Working capital changes Inventory Receivables Payables
Openings balance as on January 01, 2014 4,350 3,300 7,250
Add: transferred in on acquisition of subsidiary 1,500 2,400 1,800
Less: transferred out on disposal of subsidiary (1,650) (1,500) (800)
4,200 4,200 8,250
Less: closing balance as on December 31, 2014 (4,700) (3,900) (8,000)
Working capital changes (500) 300 250
W-3 Income taxes paid
Current and deferred on January 01, 2014 (3,525+1,050) 4,575
Add: transferred on acquisition of subsidiary 400
Add: tax for the year 2,250
Less: current and deferred tax as on Dec 31, 2014 (5,375)
Income taxes paid during the year 1,850
W-4 acquisition of PPE
Opening balance on Jan 01, 2014 16,250
Add: transferred in on acquisition of subsidiary 12,800
Less: transferred out on disposal of subsidiary (7,250)
Less: depreciation (3,850)
Add: revaluation surplus 2,000
Less: disposal of plant (2,500)
Less: closing balance (25,450)
Acquisition during the year (8,000)
W-5 dividend from associate
Opening balance 5,400
Add: income from associate 1,650
Less: closing balance (6,200)
Dividend received 850
W-6 dividend to NCI
Opening balance 3,200
Add: total comprehensive income 1,200
Add: acquisition of Gomel 3,400
Less: disposal of Stone (4,200)
Less: closing balance (3,100)
Dividend paid 500
A-5
a) Impairment of goodwill
Rs. (m) Rs. (m)
Goodwill at the beginning of the year 1,922.00
Add: goodwill on acquisition of EL (200-(320x60%)) 8.00
Less: goodwill on disposal of YL ((560-(550x90%))x50% (32.50)
Less: goodwill at the end of the year (1,750.00)
Impairment loss on goodwill 147.50