1. Statement OF Cash Flows Ind As 7
Presentation By:

2. OBJECTIVE & SCOPE
To require the provision of information about the historical changes in cash and cash equivalents of an entity by means of a statement of cash flows which classifies cash flows during the period from operating, investing and financing activities.
SCOPE
Integral part of Financial Statement

3. Benefits of Cash Flow Information
A statement of cash flows, when used in conjunction with the rest of the financial statements,
to evaluate the changes in net assets of an entity,
financial structure (including its liquidity and solvency )
Ability to affect the amounts and timing of cash flows in order to adapt to changing circumstances and opportunities
Comparability, eliminates diff. due to diff accounting policies adopted .

4. KEY TERMINOLOGY Cash comprises cash on hand and demand deposits.
Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Operating activities are the principal revenue- producing activities of the entity and other activities that are not investing or financing activities.
Investing activities are the acquisition and disposal of long- term assets and other investments not included in cash equivalents.
Financing activities are activities that result in changes in the size and composition of the contributed equity and borrowings of the entity.

5. CASH & CASH EQUIVALENTS
To meet short term commitments, rather than for investment or other purposes and subject to insignificant risk of change in value.
Short Term maturity = 3 mths or less from date of acquisition
Redeemable Pref shares - acquired can be considered
Bank Borrowings - Generally Financing. repayable on demand form an integral part of an entity's cash management, bank overdrafts are included as a component of CCE. A characteristic of such banking arrangements is that the bank balance often fluctuates from being positive to overdrawn.(Temp OD)
Cash management includes the investment of excess cash in cash equivalents

6. PRESENTATION OF STATEMENT OF CASH FLOW
Classification as Operating, Investing and Financing. Single transaction may fall into more than one activity (Repmt of EMI for FA into Int and Principal)

7. OPERATING ACTIVITIES Revenue Generating Activity Cash Inflows
from customers from sale of goods and the rendering of services
from “other revenues,” such as royalties, fees and commissions
Cash refunds of income taxes unless they can be specifically identified with financing or investing activities
Cash Outflows
to suppliers of goods and services
to or on behalf of employees
For income taxes unless they can be specifically identified with financing or investing activities.
ALSO : from contracts held for dealing or trading purposes securities and loans for dealing or trading purposes
Payments to manufacture or acquire assets held for rental to others and subsequently held for rental to others and subsequently held for sale as described in paragraph 68A of Ind AS16 PPE are cash flows from operating activities

8. INVESTING ACTIVITY
resources intended to generate future income and cash flows which result in a recognized asset are eligible for classification as investing activities and it also include cash advances and collections on loans made to other entities
Cash Inflows from
disposal of property, plant, and equipment
disposal of debt instruments of other entities
the sale of equity instruments of other entities
Cash Outflows
Purchase of property, plant, and equipment
Acquisition of debt instruments of other entities
Purchase of equity instruments of other entities (unless held for trading purposes or considered to be cash equivalents)
When a contract is accounted for as a hedge of an identifiable position the cash flows of the contract are classified in the same manner as the cash flows of the position being hedged.

9. FINANCING ACTIVITY
obtaining resources from and returning resources to the owners. LIKE obtaining resources through borrowings (short term or long term) and repayments of the amounts borrowed.
Cash Inflows
Proceeds from issuance of share capital
Proceeds from issuing debt instruments (debentures)
Proceeds from bank borrowings
Cash Outflows Cash Outflows
repayments of amounts borrowed;
payments by a lessee for reduction of O/S liability of finance lease.
interest and dividends received and paid may be classified as operating, investing, or financing cash flows, provided that they are classified consistently from period to period .

10. NON CASH TRANSACTIONS
Non cash investing and financing activities should be excluded from the cash flow statement and reported “elsewhere” in the financial statements
Conversion of debt to equity
Issuance of share capital to acquire property, plant, and equipment.
( c) the acquisition of assets either by assuming directly related liabilities or by means of a finance lease;
(d) Acquisition of entity by issue of equity

11. REPORTING OF CASH FLOWS
Report separately major classes of gross basis arising from investing and financing activities. Except:
Recpt & Pmt on behalf of customers when the cash flows reflect the activities of the customers rather than those of the bank; for example, the acceptance and repayment of demand deposits
Cash flows relating to deposits with fixed maturity dates
Placements and withdrawals of deposits from other financial institutions
Cash advances and loans to bank customers and repayments thereon

12. For Financial Institutions
Cash flows arising from each of the following activities of a financial institution may be reported on a net basis:
(a)cash receipts and payments for the acceptance and repayment of deposits with a fixed maturity date;
(b)the placement of deposits with and withdrawal of deposits from other financial institutions; and
(c)cash advances and loans made to customers and the repayment of those advances and loans.

13. DIRECT METHOD
shows each major class of gross cash receipts and gross cash payments. The operating cash flows section of the statement of cash flows under the direct method would appear something like this:
Amt recd from customers
Amt paid to suppliers
Etc.

14. INDIRECT METHOD
The indirect method adjusts accrual basis net profit or loss for the effects of non-cash transactions. Example :
Profit before interest and income taxes Add back depreciation
Add back amortisation of goodwill Increase in receivables
Decrease in inventories Increase in trade payables Interest expense
xx,xxx xx,xxx
xx,xxx xx,xxx xx,xxx xx,xxx
xx,xxx
Less Interest accrued but not yet paid Interest paid
Income taxes paid
Net cash from operating activities
xx,xxx
xx,xxx xx,xxx xx,xxx

15. FOREX Translation - Transaction @ rate effective on date of Cash Flow
cash flows of foreign subsidiaries rates prevailing when the cash flows took place .
Associaes & JVs-
If Equity Method used: cash flows between two entities
If Prop Method - include the venturer's share of the cash flows of the investee
Acquisitions & Disposals of subsidiaries and other business units :-
present separately
and classified as investing activities,
with specified additional disclosures.
The aggregate cash paid or received as consideration should be reported net of cash and cash equivalents acquired or disposed of

16. investing and financing transactions which do not require the use of cash should be excluded from the statement of cash flows, but they should be separately disclosed elsewhere in the financial statements
the components of cash and cash equivalents should be disclosed, and a reconciliation presented to amounts reported in the statement of financial position
the amount of cash and cash equivalents held by the entity that is not available for use by the group should be disclosed, together with a commentary by management

17. REPORTING FUTURES, FORWARD CONTRACTS, OPTIONS, AND SWAPS
Normally classified as investing activities, except
When such contracts are held for dealing or trading purposes and thus represent operating activities; or
When the payments or receipts are considered by the entities as financing activities and are reported accordingly.
When a contract is accounted for as a hedge of an identifiable position, the cash flows of the contract are classified in the same manner as the cash flows of the position being hedged.

18. Major Changes in Ind AS 7 vis-à-vis Notified AS 3
(i) Bank Overdraft Repayable on Demand:
Ind AS 7 specifically includes bank overdrafts
which are repayable on demand
as a part of cash and cash equivalents,
whereas the existing AS 3 is silent on this aspect.

19. Major Changes in Ind AS 7 vis-à-vis Notified AS 3
(ii)Treatment of Cash Payments in Specific Cases:
Ind AS 7 provides the treatment of cash payments
to manufacture or acquire assets
held for rental to others and
subsequently held for sale in the ordinary course of business
as cash flows from operating activities.
Further, treatment of cash receipts from rent and subsequent sale of such assets
as cash flow from operating activity is also provided.
The existing AS 3 does not contain such requirements.

20. Major Changes in Ind AS 7 vis-à-vis Notified AS 3
(iii) New Examples of Cash Flows arising from Financing Activities:
Ind AS 7 includes the following new examples of cash flows arising from financing activities:
(a) cash payments to owners to acquire or redeem the entity’s shares
(b) cash proceeds from mortgages
(c) cash payments by a lessee for the reduction of the outstanding liability relating to a finance lease.

21. Major Changes in Ind AS 7 vis-à-vis Notified AS 3
(iv) Adjustment of the Profit or Loss for the Effects of Undistributed Profits of Associates and Non-controlling Interests:
As compared to the existing AS 3, Ind AS 7 specifically requires adjustment of the profit or loss for the effects of ‘undistributed profits of associates and non-controlling interests’
while determining the net cash flow from operating activities using the indirect method.

22. Major Changes in Ind AS 7 vis-à-vis Notified AS 3
(v) Cash Flows associated with Extraordinary Activities:
The existing AS 3 requires cash flows associated with extraordinary activities to be separately classified as arising from operating, investing and financing activities,
whereas Ind AS 7 does not contain this requirement.

23. Major Changes in Ind AS 7 vis-à-vis Notified AS 3
(vi)Disclosure of the Amount of Cash and Cash Equivalents in Specific Situations:
As compared to the existing AS 3, Ind AS 7 requires an entity (except an investment entity) to disclose
the amount of cash and cash equivalents and
other assets and liabilities
in the subsidiaries or other businesses over which control is obtained or lost.

24. Major Changes in Ind AS 7 vis-à-vis Notified AS 3
(vii) Disclosure of the Amount of Cash and Cash Equivalents in Specific Situations:
Ind AS 7 also requires to report the aggregate amount of the cash paid or received as consideration for obtaining or losing control of subsidiaries or other businesses in the statement of cash flows, net of cash and cash equivalents acquired or disposed of as a part of such transactions, events or changes in circumstances.
The existing AS 3 does not contain such requirements.

25. Major Changes in Ind AS 7 vis-à-vis Notified AS 3
(viii) Cash Flows arising from Changes in Ownership Interests in a Subsidiary:
Ind AS 7 requires to classify cash flows arising from changes in ownership interests in a subsidiary that do not result in a loss of control
as cash flows from financing activities.
The existing AS 3 does not contain such a requirement.

26. Major Changes in Ind AS 7 vis-à-vis Notified AS 3
(ix) Investment in Subsidiaries, Associates and Joint Ventures (Investees):
Ind AS 7 mentions the use of equity or cost method while accounting for an investment in an associate, joint venture or a subsidiary.
It also specifically deals with the reporting of interest in an associate or a joint venture using equity method.
The existing AS 3 does not contain such requirements.

27. Major Changes in Ind AS 7 vis-à-vis Notified AS 3
(x) Use of Different Terminology and Translation of Cash Flows of a Foreign
Subsidiary:
Ind AS 7 uses the term ‘functional currency’ instead of ‘reporting currency’ (as used in the existing AS 3).
Ind AS 7 also deals with translation of cash flows of a foreign subsidiary
whereas in the existing AS 3, it is not dealt with.
(xi) Disclosures:
Ind AS 7 requires more disclosures as compared to the existing AS 3.