Stztenent

Required:
in
7,CosingOpeningProceeds Investrment
Expenditure
ProceedsReceiptProceeds Purchase expenses
InterestInterest
inIncreaseInterest 132
CarryinAmortisation
g ProfitDepreciation Provision
Book LossIncome Dividend PartProfitNeticulars
prIolviudstedraytoui:oto
n
on value on ||
issued cash cash frorn from offrorn of inpaid income sale tax for Financial
Prepare grant fixed
Working amount sale of paid 1:
and and on
venture
joint during of of (Including
short-term
long-term calls on charged the assetsof Income
The
by Bank foconstruction
r assets InvestmentsCapital assets during
the the Bank capital in the investnents of Reporting
arrear Capital invest dividend fol owing
year
ment grant to sold (net) the tax
Institute Cash balancebalanceborrowings
borrowings projects Profit and
work (excluding year
Flow sold & tax)
of in
Loss paid information Analysis
Chartered
Statement progress Account
Cash
8
Accountants for Bank l ustfromrathetions
the Balance) records
year
of of
India
accordance Samrath
(make
Ltd
necessary with for
the
Lakhs) in
(R
Ind year
25,000
CasAS
Flhow 20,000 4,248 5,000 8,535 2021-22
10,000 2,506 27,765 185 40
25,980 34,740 3,850 14,560 56,075 10,520 100
6
assumptions). 6,988 5,003 20,575 12 2

D Ne |Particu Solution
 FloM
B Net lCash |Particulars Solution:
CCash Interest Sale Sale Cash Cash
Adjustment
Net PaidTax(excluding Expenses
Operating InterestInterest Profit Loss
Amortisation
et
|Net |D|Nividend pt Expenditure
ProceedsReceiProceeds Net Purchase
Investment Depreciations
InterestProceeds of of Cash on on Profit Flow
cash Cash income sale sale
Increase Flows Investment
Income fixed Flow generated before from
of of used cash forProfit on
flow paid from from from used
grant in
fixed assets from on of
(including
infrom during short long calls from in onJoint on
in from increase &before investments on capital FA tax
Operating Cash
Investing
Operating Bank investments (net)
Cash for investing
Financing
Assets (27,765(185-40)
construction,VentureInvestments Adjustments Flow
financing the term termcapitalarrearsin operations working grant
&
dividend Balance) in
Cash + working ActivitiesStatement
yearborrowings
borrowings projects Activities work Activities
100)Activities
Activities capital
Equivaleactivities
nts tax) on capital Samrath
Limited
changes for
profits the
(A+B+C) year
ended
Amount
Lakhs)(in
31
20,00030,000 March
10,000(2,506) (100)
27,865 (6) 40
2506 145 Cash
(34,740) (3850)(14,560)
(8,535)(10,520) 20,575 25980 2022
12 2
Flow
Amount
Lakhs)(in
Statement||
(56,075) 57,428
(22,634) (2,895)(4,248) 1,353
198527,514 133
 Additional
Provision
Taxation
Liabilities
Expenses
for for Payable Debentures9%
Creditors
BillsSundry General
Reserve
Profit Reserve Redeemable
Preference |Liabilities
Redemption
CapitalCapital
Reserve Equity
Share Illustration
Capital 10%Capital Honey Note: Less:
ParticularsWorking
Notes: Particulars I34
(ii) ) and Proceed sale
on Loss Book (Closing
Balance) Cash
(Openi
Balannce)g Cash ||
acquired. and Capital On Ltd Dividend
Information:
piece A Loss on & & Financial
for 2: value
Debentures lst Account the sale Cash Cash
April,
Reserve of From tax of
land of
year bas assets assets EquivalentEquis valents Reporting
2020 has the
ended been sold
worthconsisted been following
plant a as as and
?1 sold 15,00,000 31.03.2021
31.03.2022 31st abolished, on on
95,00030,000 20,00095,000
2,00,000
1,60,000 1,00,000
1,00,000 1,00,000 6,00,000 Analysis
lakh was ofout March, 31st lst
sold profit Balance
was
for the March April
on 2022:
issued for 1,50,000 12,50,000 Balance
Sheet companies
Sheet 2022 2021
90,000 sale 60,00020,000
Separation
Voluntary Receivable
Debtors
Sundry
30,00080,000 1,10,000 2,50,000Bil s 2,00,0005,00,000
at and (Cost and
par
(Original profit Payments Cash
and Inventory need
Preliminary
Expenses Bank InvestmentsMachinery Plant
Building
and Landand Assetsinformation,
-1,20,000)
as not
part on Amount
Lakhs)(in
revaluation. pay
Cost
consideration
-70,000 and preparedividend Amount
Lakhs)(in
the
balance 31.03.2022
31.03.2021 Cash taxes 145 40 185
for and 15,00,000 1,25,000 1,75,000 7,65,000
1,50,000 Amount
Lakhs)(in
10,00065,000 65,00095,00050,000 Flanymore.
ow
plant W.D.V land
6,988 5003
was Statemen,.
of
-<DU 12,50,000 2,00,000
1,30,000 70,000 90,000 80,000 5,00,000
revaluu 65,000 25,000 90,000
4.5
lakhs

Ne Les Add Less: Less: Oper Add: Less: Less: |Add:

B. Add: 1Add: Adjus Net p|A.Cas Partic
Pre Cas |Add
 e,00,003.2021 ment o
rweaals a 1,30.00 70,0 90,00 80,0
65,00 25,00 90,00
ofAs lab 12,50.0
A.
Cash |Add: |L ess: Add: Less: Add: Less:
Operat ing Add: Less: Less: Add: Add: AdiAdd:ustment Net Cash Particulars Solution: (vi) (vi ) (vi) ()(iv) (i )
Add:Proceeds B.|Net ordinary |Less: Cash t ProfiimtinProvi sion ation pr ofit Part
Cash cash Extitemsra flowIncome Decrease
Increase Decrease
Increase
Increase Increase Interest ProfiPrel aryDepreci Flow Vol
charged Income- u nta
Diry
rect o rs
ed profit on on fobet
r ore Depreciation Pre-acquistion tf
theof
taxes on on -tax
Proceeds flow Volfromuntary before generat
from sale sale for non-cashOperating have
in in in in in in
Bil before
debent u res of of
Expenses appropriations separat
Land liability i o n investments
from paid fro m Bìl s
Accrued Creditors Debt o rs Inventory provi
tax ded Cash dividend
from sale operating separation
extraordinary plant (see @15% paid
of (see Invest ment and
sale Investing
land operations Payable Receivable working (see w/onon-operating
W.N.8) liabilities (9% WN.9)during Activities Flow Building. has for cost 15% (Cost
1,35,000.theat investment.
dividendreceivedR5,
of activities (95,(1,705,00-80,
000-10,00)30,(95,000)000-90,000) W. N .3) (see Statement beenof50,000
plant payment s of (see currentyear
item (20,000-30,000)(65,000-70,000) capi2,ta0l 0,000) (25,000-10,000) the W.N.1) -
Activities WN.4) year written 50,000)
for5,000
(30,000-20,000) changes expenses
(see fHoney
or Ltd. was the
the was current was was
off adjusted
W.N.3) year from
estimated adjusted sold
ended Plant against year. for
against70,000.
31 account
1,40,000 General
1,35,0001,35,000 March cost
3,83,000 (20,000)(40,000) 15,000 but Cash
(45,000) (5000) 18,000 of
5000 2022 noReserve.
(1,10.000)2,53,000 1.00,0003,53,000 10,000(10,000) 15,000 Flow
90,0001,50,000 depreciation
Statement||

(
has 135
been
1,43,000
 InRevaluation
(bal.
fig.)ProfitTo Balance
(1,50,000-1,20,000) To b/dTo (2) Add: Less:
Particulars
Net (1)
Working
Notes:
the Add:
Cash Add: Net Net Less: Less: Less: |Add: Add: C. Net|Add: Less: Less:Particulars T36
profit
given Proposed Balanceprofit Cash cash ||
Particulars and Cash
decrease cashInterestRedemption Proceeds Purchase
Purchase
Proceeds
on Dividends Proceeds Pre-acquisition inancial
Balance after cash and used flow used
sale as
on
dividendappropriations equivalents cash cashin inpaid from from from in of offrom
sheet, 31.03.2021 financing onpaid of investingInvestment plant Reporting
equivalents anddebentures
(6,00,000x issue
preference issueFinancing divided sale
(6,00,000 cash of of of
Capital at activities
the debenturesequity activitiesreceived investments and
Amount()
equivalents
end at Activities Analysis
Reserve x the 15%) shares
3,00,000 2,00,000 15%) of shares
70,000 30,000 beginning
the
= Building
Land & year (A+B+C)
30,000
of
the
+ Balancec/dBy cashBy
70,000 year
Particulars
=
1,00,000 (3,50,000)
(2,00,000) 1,00,000
(90,000) 1,00,000
(18,000) (25,000) 70,000
5000 (3)
as
shown Amount ()
1,40,000 1,60,000
1,10,000
90,00050,000

Amount ()
(1,08,000) (60,000)
1,50,000 150,000 (25,000)
3,00,000 65,00090,000

To
B To
B (7) To CCost |To
B To (6) To
B (5) |To E
 65,00090,00025,000)8,000) O00)

1,50,000 ount ()
3,0 ,0 0 1,50,000
(5) ance|To b/d
To BalTo (4 Debentures
BaTo
nk issued b/d (0)
ToBalanceTo
Balancec/dTo To (7) Balancec/dToSeparation
CRRVoluntary
ToCost To (6) BalanceTo
c/d P
Bank Bank &
L
Particulars Particulars Particulars (Bal. A/Part
C iculars ToP&LA/c(90,0 0-50,0 0) Particulars
(Bal.
fig.)
fig.)

Amount(?)
Amount ()
Amount ()
Amount () 3,50,000
9,90,000 5,00,000
1,00,00040,000
Amount () 1,00,000 1,00,000 1,25,00025,000 20,00080,000
1,00,000
2,50,0001,00,000 50,000
1,50,000 90,00060,000 Machinery
Plant &
Capital Investments
General
Reserve Cash By
By
Proposed
Dividend Dividend
Pre-Aquisition CashBy Balancec/dBy
Land of By By Balance
c/dBy By Depreciation
Balanceb/By
d Particulars
Balance
ByBy b/d Profit Profit Reserve Particulars
P Particulars
&L Particulars on on
Particulars (bal.
A/c Revaluation sale
of fig)
land Cash
Flow
Amount(?)
Amount(?) Statement
Amount )
Amount () 9,90,0007,65,000 1,35,00090,000
1,25,00050,000 70,000
Amount () 2.50,000 2,50,000 1,00,000 70,00030,000 5,000
||
1,50,000 90,000 60,000 137
 (9) (S)
You Cash Provision Book d.
ToBalb/To BalanceTo
dd To 138
CashLong-term Grant Purchase
Expenditure Increaseactually
InterestInterest Dividend
paitadx paiParticulars
Capital Loss BookIncome
paid Interest Profit Depreciation d Net Ilustration
are on
Bank Rank )
& received onvalue value profit
required Bank &Bank income grant sale (Bal.
Particulars Particulars
(bal. Anamcial
for in
ofexpenditure sale
working of of of before 3: fig)
Income
balancebalanceborrowings onfixed of debited
received- asset asset
fig.)
to for
construction assets fromInvestment
Investment tax Geena Reporting
prepare capital sold
on on tax capital debited
Investment in provision Ltd.
31.3.2007
1.4.2006debited from amortized
sold P/L eard
a project presents
Cash banks work(excluding in A/c
PIL Aahsis
in credited in Amount () Amount ()
Flow P/LAlc Alc P/L you
cash A/c the1,75,0001,10.000 65,000 Separation
VolPayment
untary1.95,s000 95,01,0000,000
Statement in
bank
& P/LAlc following ProviTaxatsioniofonr
balance) General
BaReserve
By
lcd By Balance
ByBy b/d
as P
per information &
Particulars L
Particulars
Ind A/c
AS for
7. tyearhe

ended
2022:
Amount() Amount
lakhs) In
(? 31 1.35,000
1.95,000 60,000
1,75,000
125,00050,000
36,000 March
33,318 24,000 5,10010,202
41,688 22,092 67,290 13,042 12,000 3,000 48
222
55,866 120 10
8,000 6,000 6,000 18

Ad Ad|Div Cas Add |Add: Add: Purch Cash Net CLes : Les : Ir Les : At
Les : Pe Ad La
Ad : DeNet P
Less
Cash Les : OpeIrrat Add: Ir Adjust Cash Flc
 318 000 202 2022: h 0 )
,688 ,092 ,290 ,042 ,000 ,000 120 10 48 222 100
8,000 6,000 5,000 5,866 18

|Cash |Add: |Net |Paid

|Add: Interest
Less: |Add:Dividend Incomne eAdrestldRecei
Add:Purchase Cash Net LesPaiT:axd Cash Les : Intdebi t:IntedeLerestsv:Amort lAd : aAdtiold:n Net
ed les :isat|Leiso:nDepreci
Net Paid Cash Net |Les: Add: Add:Interest
Cash Operatinbepgrofoitre
Profit Los
&Cash Cash cash Long Grant FloExpendi
w cash ture Sale Sale Flow generateIncrease
d Profit Flow
Cash of of of used on on for
increase flow
/Adfustrment beforePartCiacshulars solution:
fromn
& term Received assets
from used investment fixed from in in sale sale
Equivalents Cash from in from
working tax
Borrowings Financing on(222 asset
Investing
operating ofgrantgovtof
ofnon-cash Operating
asset
in
Equivalents financing investing Cash
cash for capital - operations Working investmnent and
capital (33,
48) 318 capital Statement
Flow
at & Activity
activities non-operating Activity
the cash from Activity
ActivitiesProject
atactivities + Capital
end Projects 120)
the
equivalents Banks
of
beginning
the Changes 1
expenses Geena
for Ltd.
year the
of period
year
ended
Amount
Lakhs in

on
(67,290) 24,000 36,000
(22,092) 31.03.2022
(13,042) (10,202) (41,688) 12,000(3,000) (120)
(10)
33,438 3,000 48 Cash
55,866 174
18
Flow
Amount
Lakhs in Statement

68,918
(27,168) (3,472)(5,100) 1,628 |
32,640 139
8,000 6,000 2,000
 140 | Einancial Reporting and Analysis

Illustration 4: Given below is the Statement of Proft and Loss Ambika

information: Statement of Profit and Loss of Ambika Ltd.
Ltd. and relevant
Cash Flow
For the year ended 31 March, 2022 Bal nce She Solution:
Direct Method
Statement || 141
Revenue: Cash Flow from
Sales in lakhs CashReceipts Operating Activities
Cash sales andl collection from trade receivables
Interest and dividend
4150 trade Receivables s- -
Stock adjustment Sales + Opening Closing trade Receivables
100
Total (A) (4150 + 250 400)
4000
20
Expenditure Cash Payments
Purchases 4,270 Cash Purchases & Payment to Trade Payables
Wages and salaries Purchases + Opening Trade Payables -Closing
-
Other expenses 2,400 trade Payables 2380
800 (2400 + 230 - 250)
Interest
|Depreciation 200 Wages &Salaries paid (800 + 40 - 50)
790
60 Cash Expenses (200 + 10 - 20)
Total (B) 190
Profit before tax (A-B) 100 Tax Paid- Advance Tax
195
|Tax provision 3,560 Cash Flow from Operating Activities (A-B)
710 445
Profit after tax 200 Indirect Method
Balance of Profit and Loss account
Profit avaílable for brought forward 510 Particulars
Amount
Appropriations:
distribution (C) 50
Proft before Tax 710
560
Transfer to general reserve Add: Non cash items:

Proposed dividend (incuding CDT) 200

Depreciation 100
Total (D) 330 Interest Payment 60
Balance (C-D) 530
|Less: Interest & Diyidend (100)
Relevant Balance Sheet 30
Tax Paid (195) 135
information |OperatingProfit before working capital changes 575
Particulars
Trade receivables 31.3.2022 ( in lakhs) 31.3.2021 (7 in lakhs)
|Less:Decrease in Trade Receivables (250-400) (150)
Less: Decrease in inventories (180-200) (20)
Inventories 400
250
Trade payables 200
180
|Add:Increase in Trade Payables (250-230) 20

Outstanding wages 250

230 Add: Increase in O/S Wages 10
130
Outstanding expenses
Advance tax
50
20
40
Add: Increase in O/S Expenses 10
445
10 Cash Flow from Operating Activities
Tax provision 195
180
Assessed tax liability 200
180

Compute cash flow from operating

activities using both direct and indirect
method.
 142 Fmoncial Reportong and Analystis

Mustration 5: The balance sheet df Khurana Ltd for the years ended Fow Sttemet 143
SaTTSITIZrized thS 31st March 2021
Solution:
Khurana Ltd.
Libdes 31e March 31t March Cash Flow Statement for the periodendedde
on 31.3 2022
2021(Z 2022 (T Assets 31st March 31
Equity Share capital 5,00,000 750,000 Good will
2021 ( 2
Particalars
Operating Activity
Amount
Pref share capital Cash Flow from
2.00,000 L00,000Land &Building 10,000 extraordinary items
sTt oroft before tax and
Security Premiam 10,000 Plant
4,00,000 4 Add- Provision
for tax
11000
for non-cash and non-operating expenses
General Reserve 70.000 1,00,000 Investment 3,00,000 2700% Add Adjustrment
Add Goodwill amortisation
Proft and Loss AC 45,000 1,00,000 Depreciation on land and building
1000
10% Debentures
50,000 Stock
90,000
700 1d4- 120000
machinery
2.00,000
| Debtors 1,20,0010 Add Depreciation on plant and 40000
1,00,000 investment
Outtandng Wages 5,000 10,000 Advance Tax 86.00 Add- Loss on sale of 7000
Creditors 90,000
50,000 Add- Disposal of plant and machinery 10000
40,000
Provisian for Tax 60.000
1,15,000Prepaid
80,000 Bank
Expenses 20,000
45,000
Stock adjustment
Interest on debentures
Provision for 85,000 10D00

Depreciation (P && M)
30,000 50,000 Cash 1,10,0 Onerating Profit before Working Capital Changes
45,000 35,000 Add- Increase in outstanding wages
12,00,000 12,65,000 Add: Increase in creditors 25000
12,00,000
Adjustment 12,65,000 Less: Increase in
Stock
Add Decrease in Debtors
370001
() Ilakh equíty shares were íssued at 10% 14000

te premníum Less: Increase in prepaid expenses (25000

generalbng the year, one share was issued as
of 407000
bonus for every 10
shares held out of Less Tax Paid (80000
() Preerence shares of
Gi) Tax for the year T1,00,000 swere converted ínto equíty shares. 322000

()
ended 2020 was setled at 90,000 by Assessíng Cash Flows from Investing Activities
Depreciation rate on land &Buiding
() Plant was 20% pa. Oficer. Purchase of Investments (40.000)
&Machínery
(vii) Investment costing t30,000 WDV {10,000 was disposed off Add: Share of Investments 63,000

them at a losspurchased
(2.00,000)
of 10%. duríng the year amounted of {40.000 &the
duríng the year. Less: Purchase of Land and Building
(L7000)
(viit) An tem in the stock of company also sold some af Net Cash used in Investing Activities

year t20,000 was wrongy valued at 27.000. whích was Cash Flow from Financing Activities
(2.00,000)
(ix) Debenture has rectified during the Redemption of Debentures
been (10.000)
The net profit earnedredeemed in the middle of the year.
Less Interest paid on debentures
Add Issue of Equity Share Capital L00.000
Prepare cash flow statement for theduring the yearis {1,20,000. 10.000
year ended on 31st March, Add: Premium on issue of Equity Share Capital
(35.000)
2022 Less Dividend Paid
(139000)
Cash used in Financing Activities (10.000)
Net Cash &Cash Equivalents 45000
Addt Opening Cash &Cash Equivalents 35000
Cash &Cash Equivalents at the end of the year
 144 || Financial Reporting and Analysis

Working Notes: Cash Flow

Land and Building Statement || 145
6:. From the following summary of cash
Particulars Amount ()
Illustration
account for
Calculatecashaflow from operating activities using the year ended 31st March,
To balance b/d
4,00,000
Particulars RonakLtd., direct method: 2022 of
To Bank
2,00,000
By depreciation Amount () Particulars
R) Particulars
(3)
By balance c/d 120.000 Tobalanceb/d 1,25.000 By Cash Purchases
6,00,000 1,30,000
4.80.000 ToCashSales 1,50,000 By Trade payable
1,44,000
Plant and Machinery 6.00.000
000 To Trade Receivables 1,60,000 By Rent paid
50,000
Particulars
To balance b/d Amount (3) Particulars To Interest &
Dividends
Bank
2,000 By Offhce expenses
25,000
1,50,000
ToLoan from Income Tax
3,00,000
By provision for Amount Investments 80,000 By Investment
30,000
depreciation 20,000 TTo Sale of 90,000
By P&L A/c To Trade Commission 40,000 By Repayment of Loan
1,00,000
(Disposal of P&M) 10,000 By Interest on Loan
7,000
By Balance cld By balance cld
3,00,000 2,70,000 1,31,000
7,07,000
7,07,000
Provision for Depreciation on Plant & 3.00,000
Particulars
To P Amount () Machinery Solution:
&M
To balance cld 20,000 Particulars
By Balance b/d Amount (3)
Cash flow statement of Ronak Ltd. for the year ended 31st March, 2022 (Direct Method)
Particulars )
50,000 By Depreciation 30,000
Cash flows from Operating Activities
70,000 40,000
70,000 Cash Received from sales of goods 1,50,000

Particulars Advance tax Cash Received from Trade receivable 1,60,000

To Balance b/d Amount () Trade Commission received
To Bank 50,000 Particulars
By provision for tax Amount ()
40,000
3,50,000
40.000 50,000
By Balance c/d Less:
90,000 40,000
Payment for cash purchase (1,30,000)
90,000

Particulars Provision for tax Payment to trade payable (1,44,000)

To Bank Amount () Rent paid (50,000)
To advance tax 40,000
50,000
Particulars
By Balance b/d Amount () Office expenses (25,000)
To Balance c/d (3,49,000)
By P &L A/c 60,000
80.000
(bf 1,10,000 Cash generated from operations 1000
1,70,000
Less: payment for Income tax (30,000)
1,70,000 Net cash used in Operating (29,000)
Activities
 146 || Financial Reporting and Analysis

Illustration 7: From the following Balance Sheet of Ritika | Cash Flow Statement || 147
Ltd., prepare Cash Flow
Particulars

I. EQUITY AND LIABILITIES

Note
No.
Statement:
31st March,
2022 (3) 3lst Mar
Particulars
Equivalents
31st March
2022 ()
31st March
2021 (3)
1. Shareholders' Funds 2021 () Cashand Cash
Cash in Hand
70,000 50,000
a) Share Capital Bank Balance 3,05,000 2,90,000
b) Reserves and Surplus
2. Non-Current Liabilities 15,00,000 10,0,00% 3,75,000 3,40,000

Long-term Borrowings
7,50,000 6,00,00% AdditionalInformation:
(i) Contingent Liability: 31st March, 2022
3. Current Liabilities 31st March, 2021
a) Trade Payables
L.00,000 2,00,000
Proposed Dividend 20% 15%
me tax paid during the year includes 15,000 paid towards Dividend Distribution Tax.
b) Short-term provisions
Total 2 1.00,000 1,10,000 (iüi) Land and Building of book value 1,50,000 was sold at a profit of 10%

| II. ASSETS
95,000 80,000 (w) The rate of depreciation on Plant and Machinery is 108%
25,45,000
1. Non-Current Assets
a) Fixed Assets:
19,90,000| Solution: Ritika Ltd.
CASH FLOW STATEMENT
i) Tangible Assets for the year ended 31st March, 2022
ii) Intangible Assets: Goodwill
b) Non-current Investments
10,10,000 12,00,000 Particulars ()
2. Current Assets
1,80,000 2,00,00 Cash Flow from Operating Activities
6,00,000 Closing Balance of Surplus i.e., Balance in Statemnent of Proht 7,50,000
a) Inventories
and Loss
b) Trade Receivables Less: Opening Balance of Surplus, i.e., Balance in Statement of
1,80,000 6,00,000
c) Cash and Cash 1,00,000 Profit and Loss
Total Equivalents 4
2,00,000 1,50,000
1,50,000
3,75,000 3,40,000
Notes of Accounts Add: Provision for Tax 95,000
25,45,000 19,90,000
Dividend Paid 1,50,000
Particulars
Net Profit before Tax and Extraordinary Activities 3,95,000
1. Long-term Borrowings 31st March 31st March Add: Non-cash/Non-operating Expenses:
2,000, 10% 2022 () 2021 (3)
Bank Loan
Debentures of Rs 100 each Depreciation 40,000
Goodwll Amortised 20,000 60,000
2,00,000
2. Short-term Provisions 455,000
1,00,000
Provision for TAX 1,00.000 Less: Non-operating Income:
2,00,000 15.000
3. Tangible Assets Gain (Profit) on sale of Land and Building
Operating Proft before Working Capital Changes 4,40,000
Land and Building 95,000 80,000
Plant and Machinery 6,50,000 8.00,000
3,60.000
4,00,000
10,10,000 12,00,000|
 148 | Financial Reporting and Anahsis

Particulars Cash Flow

Less Decrease in Current Liabilities and
Increase în Current From the following Balance Sheet and Statement l| 149
llustration 8:
Assets
Statement:
information of Ram Ltd. prepare Cash Flow
Irade Payables
Trade Receivables 10,000 Particulars Note 31st March, 31st March
S0,000 LIABILITIES No. 2022 ()
Inventories L EQUITY
AND 2021 ()
Cash Generated from 80,000 1. Shareholders Funds
Operating 1,40,000
Les Income Tax Paid(TS0,000 Activities
Cash Flow from Operating
-15,000) 3,00,000 a) Share Capital
Surplus 4,50,000 S,00,000
IL Cash Flow from Activities 65,000 b) Reserves and
2, Non-current Liabilities
2
2,55,000 1,00,000
Investing
Proceeds from Sale of Land Activities
and Building 2,35,000 Long-term Borrowings: 109% Debentures
2,00,000 \,00,000
Purchase of Non-current 1,65,000 3. Current Liabilities
Cash Used in Investing Investments (6,00,000) a) Trade Payables
IIL. Cash Flow from Activities 3 1,33,000 46,000
Financing b) Other Current Liabilities
Proceeds from Issue of SharesActivities
5,000
(4,35,000) c) Short-term Provisions (Provision for Tax) 12,000
10,000
24,000
Payment for Redemption of 10% 5,00,000 Total 10,55,000
Proceeds from Bank Loan Debentures II. ASSETS
7,80,000

Payment of Dividend (2,00,000) 1, Non-Current Assets

1,00,000
Payment of Dividend Distribution Tax (1,50,000) a) Fixed Assets (Tangible) 6,20,000 5,10,000
Cash Flow from
IV. Net Increase in Financing Activities (15,000) b) 10% Investments 80,000 30,000
Cash and
Add: Opening Cash and Cash Equivalents (I+II +II) 2,35,000 2. Current Assets
|V. Closing Cash and Cash Equivalents 35,000 a) Current Investments 10,000 8,000
Cash Equivalents 3,40,000 b) Inventories 90,000 1,00,000
Working Notes: 3,75,000 c) Trade Receivables 1,85,000 90,000
1. It is
assumed that 10%
interest is not provided. Debentures have been redeemed in the d) Cash and Cash Equivalents 70,000 42,000
10,55,000 7,80,000
2. Dr.
LAND AND
beginning of the year, therefore,
Total

Particulars BUILDING ACCOUNT Notes to Accounts

To Balance b/d () 31st March, 31st March

8,00,000 ByParticulars
Bank A/C(Sale) ()
Particulars 2022 (®) 2021()
To Gain (Profit) on Sale of
Land and ?1,50,000 +*15,000) 1,65,000 1. Share Capital
Building A/C 15,000 By Balance c/d
Equity Share Capital 3,50,000 3,00,000
(Statement of Profit and Loss) 6,50,000
12% Preference Share Capital
1,00,000 2,00,000
4.50,000
5,00,000
8,15,000
8,15,000 2. Reserves and Surplus 5,000
Securities Premium Reserve 2,50,000 1,00,000
Surplus i.e., Balance in Statement of Profit and LSS 2,55,000 1.00,000
 150 || Financial Reporting and Analysis
Cash Flow
Statement I 151
Particulars 31st March.
3. Other Current Liabilities 2022 (3) 31st Mar Particulars
before Working Capital Changes
Operating Profit
Premium on Redemption of Preference Shares
4. Trade Receivables
5,000
2021() Add:
Decrease in Current Assets and Increase in Current Ljabilities: 3,2%999
Inventories 10,000
Sundry Debtors 10.00 Trade Payables 87,000 97 900
Less: Provision for Doubtful Debts 2,00,000
15,000 1,00,009 Less: Increase in
Current Assets;
4,25000
You are informed that during the 1.85,000 10,900 Trade Receivables (Rs 2,00,000 - Rs 1,00,900)
100,000
() Amachine with a book
year:
value of 340,000 was sold for
90,000 Cash Generated from
Operations
3,25000
(ü)
(ii)
Depreciation charged during the year was 70,000. 25,000. Less: Income Tax
Paid 24,000
Preference Shares were redeemed on 31st Cash Flow from Operating
Activities 301,909
(iv) An Interim Dividend @ December, 2021 at a premium of 5% Investing Activities
(v) Dividend 129% was 15% was paid on Equity Shares on 31st lB) Cash Flow from
proposed on Preference Shares for the yearJanuary, 2022.
R1,00,000 and for the year Purchase of Fixed ASsets (WN) (2,20,000)
(vi) Fresh Equity Shares were ended 31st March, 2021 on 2,00,000. ended 31st March 2019 on Proceeds from Sale of Machinery 25,000
issued ata premium of 10% Interest on Investments 3,000
Solution: on 31st March, 2022,
Purchase of Investments (50,000)
CASH FLOW
for the yearSTATEMENT Cash Used in Investing Activities
OF RAM (242,000)
ended 31st March, 2022LTD.
Particulars
(A) Cash
(C) Cash Flow from Financing Activities
Proceeds from Issue of Equity Shares 50,000
Flow from
Closing Balance ofOperating Activities
Surplus ie., Balance in
(R)
Premium Received on Issue of Equity Shares 5,000
Loss Statement of Profit and Proceeds from Long-term Borrowings (Debentures) 1,00,000
Less: Opening Balance of 2,50,000
Redemption of Preference Shares (1,00,000)
and Loss Surplus i.e., Balance in
Add: Provision Tax
for
Statement of Profit 1,00,000 1,50,000
Premium Paid on Redemption of Preference Shares (5,000)
(10,000)
Interest paid on Long-term Borrowings
Preference Dividend 12,000 Interim Dividend Paid (45,000)
Interim Dividend 24,000 (24,000)
Net Profit before tax Cash Used in Financing Activities
(29,000)
and
Add: Extraordinary items
Non-Cash and Non-Operating 45,000 81,000 Cash Used in Financing Activities 30,000
Depreciation Expenses: 2,31,000 (D) Net Increase in Cash and Cash Equivalents (A+B+C) 50,000
Provision for Doubtful Debts Cash and Cash Equivalents in the beginning of the year
70,000 (Rs 8,000+ Rs 42,000)
Interest on
Loss on SaleLong-term
80,000
of
MachineryBorrowings (Debentures) 5,000
10,000
(E) Cash and Cash Equivalents at the end of the year
(Rs 10,000 + Rs 70,000)
Less: 15,000
Explanatory Notes:
Non-Operating Incomes: Interest on 1,00,000
Equivalents + Current
Investments.
Equivalents: Cash and Cash December, 2021. Dividend for previous year is
Investmentsloat on
3,31,000
3.000
1, Cash and Cash
2. Preference Shares were redeemed
dividend paid current
on 31st
Therefore
year.
dividend on PreferenceShares will be pald
on opening

Dalance of preference shares ie. Rs 2,00,000 @120.

 iCiat Keporting ana Analysis

Working Note: Cash Flow Statement |l 153

Dr.
FIXED ASSETS (MACHINERY) ACCOUNT Notesto Accounts
Particulars ()
To Balance b/d Particulars Particulars 31st March 31st March,
To Bank A/c (Purchase)
5,10,000 By Bank A/c(Sales) 2022 (3) 2021 (7)
2.20,000 By Loss on Sale of andSurplus
1. Reserves
3,00.000
(Balancing Figure) Balance in Statement of Profttand Loss
(Statement of ProfitMachinery Alc 25,00% Surplusie.
2,00.000
and Loss)
By Depreciation A/c 15.0 2.TangibleAssets
By Balance cld Machinery 12,70,000 10,00,000
7,30,000 70,00% Less Accumulated Depreciation
(2,00,000) (1,50,000)
Illustration 9: Following is the Balance Sheet of Vella 6,20.000 10,70,000 8.50.000
Ltd. as at 31st March, 2022 7,30,000 3. IntangibleAssets
40,000
BALANCESHEET OF THERMAL POWER LTD. Goodwill 1,12,000
as at 31st March, Additional Information:
2022
Particulars Eveningthe year a piece of machinery costing 24,000 on which accumulated depreciation 16,000 was
L EQUITY AND LIABLITIES Note 31st March
31st March sold for Z6,000.
No. 2022 (3) Statement
1. Shareholders' Funds
1 2021 3) Figure: Cash Flow
a) Share Capital Solution:
Vella Ltd.
b) Reserve and Surplus
2. Non-Current Liabilities 12,00,000 CASH FLOW STATEMENT or the year ended 31st March, 2022
3. Current Liabilities 3,00,000 11,2,00.000
00,000 Particulars 3)
a) Trade Payables 2,40,000
1,70,000 Cash Flow from Operating Activities
b) Short-term Provisions Net profit before Tax and Extraordinary item 1.00,000
Total
IL ASSETS
1,79,000 2,04,000 (3,00,000 2,00,000)
50,000 77,000 Add: Non-Cash and Non-Operating Expenses 72,000
1. Non-Current Assets 19,69,000 Goodwill Amortised
17,51,000
Fixed Assets: Depreciation on Machinery (WN 2) 66,000
) Tangible Assets 2000
Loss on sale of Machinery
i) Intangible Assets 240,000
2. Current Assets 2 Operating profit before Working Capital changes
3
10,70,000 8,50,000 Less: Increase in Current Assets and Decrease in Current Liabilities
a) Current Investrmnents 40,000 27,000
1,12,000 Trade Receivables
b) Inventories 8,000
) Trade Receivables 240,000 Inventories
150,000 25,000
d) Cash and Cash Trade Payables
1,29,000 27,900 87,000
Total Equivalents 1,70,000
1,21,000
143,000
Short-term Provisions 153,000
3,20,000 Cash Flow from Operating Activities
3,75,000
19,69,900 II. Cash Flow from Investing
17,51,000 Activities (294,000)
Purchase of Machinery (WN 1)
 154 || Fnancial Reporting and Amalysis
Cash Flow Statemet l
155
Particars
) Note
Proceeds from Sale of Machinery 31st Marh
6.000 Durticulars 2022 ) 3ISMarch
Cash Used in Investing Activities EQUITYANDLIABILITIES
IIL Cash Flow from Financing Activities (2 8% 1. ShareholdersFunds
Proceeds from Issue of Shares
a) ShareCapital
Money raised from Borrowings
Cash Flow from Financing Activities
(1,00,70,0000)00 and Surplus
b) Reserves Liabilities
2. Non-Current
3.50,000
70,000
3.00.000

IV. Net Increase in Cash and Cash Equivalents (I+II+III) Debentures)

V. Opening Balamce of Cash and Cash 17.0 Iong-term Borrowings (12% 8D.000 1,00.000

Curret Investmets
Equívalents 35.00 3. CurrentLiabilities

Cash and Cash Equivalents 1,50,000 a) Short-term Borrowing (Bank Loan) 15000 25000

b) Trade Payables l65.000

3,75.000
VL Closíng Balance of Cash and Cash 525.0N0 Total
680,000 535000

Equivalents 5.60.90 ILASSETS

Carrentvestments 1. Non-Current Assets
Cash and Cah Ecvlents 2,40,000 2 410.000 300.000
3.20,000 a) Fixed Assets
(Tangible)
Working Notes b) Non-Current Investment 40000
L Dr
MACHINERY ACCOUNT 2. Current Assets
52.000
a) Inventories
Particulars b) Trade Receivables
000
To PakAlc-Puchase 10,00.000 By Bank Alc-Sale LISOOO
294000By Accumlated Depreciation Alc ) Cash and Cash Equivalents
16.080 Total
By Loss on Sale of
(Statemet of ProftMachineryAc
and Loss)
2009
Sotes to Accounts
By Balance dd
1270000
2 Dr
1294000 1294000
Pialars

Pricala ACMULATED DEPZECLAIION ACCOUNT LReserves and Surplus

Capital Reserve
2000
00
3R000
1600 ByPariclzrs General Reserve 2000
Balance bld 150.000 Surpius ie Balance in Statement of Proft and Loss
200,000By Depeciation Ac 66,000

2160 Bdancing Figure) 2 Fued Assets-Tangible

Ilistration 16. Fro
Staenen
efollowng
Balance Sheet of Hor Lsd zs at 31st March,
21400
Machimery (Cost)
Less Acculated Depreciation
2020, prepare Czsh Fo
tl5000)d
kditiomal hformatio: (acrumulated depreciation of
i) During the year, Machinery costing 20,000
for T12.000
 156 || Financial Reporting and Analysis
Cash Flow
ii) During the year,Non-current Investments were sold at a
profit of 20%,
Statement | 157
Capital Reserve.
iii) Debentures were redeemed at par on lst which is |Particulars
iv) Tax of 15,000 was paid during the year.
v) Interim Dividend Paid during the
April 2021.
transter ed l
Dedemption ofDebentures

Intereston
Debentures Paid (20,000)
(9,600)
year
vi) Board had proposed Final Dividend foramount 25,000
to BankLoanRepaid
10%. The shareholders did not approve thethe previous year (year ended Cash Used in
FinancingActivities (10,000)
Solution: Proposed Dividend. 31st March, 2021) & Increasein Cash and Cash Equivalents (A+B+C) (14,600)
D. Equivalentsts in the beginning of the Period 3,000
Cashandi Cash 1,15,000
Star Ltd. E.
Cashhand Cash
Equivalentss at the end of the period (D+E)
CASH FLOW STATEMENT for the year |E 1,18,000
Particulars
ended 31st March. 2022 WorkingNotes:
Proft bbefore Tax and Extraordinary Items:
A Cash Flow from Operating Calculation of Net
Activities 1.
Surplusie..,Balance in Statement of Profittand Loss (Closing)
Net Proft before Tax and 35,000
Extraordinary Items
Add: Non-cash and Non-operating Expenses: (WN1) 58,000 Jese: surplus, i.e., Balance in Statement of Profit and Loss (Opening) (30,000)
Depreciation on Machinery (WN 3) Profit for the year 5,000
Interest on Debentures (12% of Rs Add. Transfer to General Reserve (33,000 -20.000)
80,000) 25,000 Provision for Tax
13,000
9,600 15,000
Less: Gain (Profit) on Sale of Interim Dividend Paid 25,000
92,600
Machinery (WN 2)
Operating Profit before Working Capital 7,000 Net Profit before Tax and Extraordinary
Items 58,000
Add: Increase in Current Changes 85,600
Liabilities 2. Dr.
MACHINERY ACCOUNT Cr.
Trade Payables Particulars
Particulars
1,05,000 To Balance b/d 3,50,000 By Accumulated Depreciation Alc 15,000
Less: Increase in Current
Assets: 1,90,600 7,000 By Bank Alc (Sales) 12,000
Inventories To Gain (Profit) on Sale of Machinery A/c*
(Statement of Profit and Loss) By Balance cd 4,70,00
Trade Receivables 22,000
Cash Generated from To Bank A/c (Bal. Fig-Purchase) 1,40,000
Less: Tax Paid Operating Activities before Tax 20,000 42,000
4,97,000
4.97.000

1,48,600
Cash Flowfrom Operating Activities 15,000
B. Cash Flow 12,000
from Investing Activities 1,33,600 *Sale Value
Purchase of Machinery (WN 2) -15,000) (5,000)
Less: Book Value on the date of sale (i.e., 20,000
Proceeds from Sale of Machinery (1,40,000) Gain (profit) on Sale of Machinery
7,000

Proceeds from Sale of Non-current Cr.

Cash Used in Investing Activities Investments (WN 4)
12,000 ACCUMULATED DEPRECIATION ACCOUNT
3. Dr.
12,000
C. Cash Flow from Particulars
Financing Activities
Proceeds from Issues of Shares
(1,16,000) Particulars 50,000
|To Machinery A/c (Transfer) 15,000 By Balance b/d 25,000
Interim Dividend Paid
50,000 To Balance c/d 60,000 By Depreciation A/cand Loss) (Bal. Fig)
(Statement ofProft 75.000
(25,000) 75,000
 158 || Financial Reporting and Analysis

4. Dr. NON-CURRENT INVESTMENTS ACCOUNT Cash Flow Statement || 159

Particular Particular UnpaidInterest on Debentures: Ason 01-04-2017 %275
To Balance b/d 50,000 By Bank A/c (Sales) As on 31-03-20181,1175
36,000 were written off against thee
To Capital Reserve A/c (Gain") 2,000 By Balance c/d Debtors Provision for Doubtful Debts Ac during
52,000 12,00 (iv)
(v) 10% bonds
(Investments): As on 01-04-2017
33,50,000
the year.
As on 31-03-2018
*Calculation of Sale Value and Gain (Profit) on sale on Non-Current Investments (NCI). 52,000 Investments: 3,50,000
Book Value of InvestmentSold= Opening Book Value Interest on As on 31-03-2018 10,500
=50,000 - R40,000 =10 000 lwi) Accrued
financial statements other than the balance sheet and
Gain (Profit) on Sale = 20% x R10,000 = 2,000. 3. Which the statement of profit and loss are
Sale value on Non-Current Investments = Book value +
required be prepared byythe companies? Explain briefly.
5, As the Gain (Profit) on sale of Gain(Profit)
)=10,000 R2,000
+ 4. What is Cash flow statement? Explain 1its importance and the format prescribed for preparing it.
Profit and Loss but to Capital Non-current
Reserve, it will not be adjusted while =I2,00,.
Investment has not been transferred to stata form
5. Arethere any differences in the formats of cash flow statement as prescribed by AS 3and Ind AS7
before Working Capital
6. The shareholders did notChanges. calculating Operating Profit Explain.
1
Explainthe direct and indirect methods of preparation of cash flow statement.
accounted in the Books ofapprove Proposed Dividend. Since it was not declared, it was
the 6.
not considered. Account nor paid during the year. Hence, in Cash naltl. From the following Summary Cash Account of YLtd., Prepare Cash Flow Statement for the year
Flow Statement l8i 7. ended 31st March, 2010 using the direct method. The Company does not have any cash equivalents.

Summary Cash Account for the year ended 31-3-2010

Review Questions '000 000
1. Classify the following activities as: Balance on 1-4-2009 50 Payment to Suppliers 2,000
(i) Operating Activities, (ii) 300 Purchase of Fixed Assets
Issue of Equity Shares
200
1) Cash receipts from TradeInvesting Activities, (ii) Financing Activities and (iv) Cash Overhead Expenses
2) Marketable Securities Receivables Equivalents, Receipts from Customers 2,800 200

Sales of Fixed Assets 100 Wages and Salaries 100

3) Purchase of
4) Proceeds frominvestment
Taxation 250

long term Dividend 50

5) Wages and Salaries paid borrowings Repayment of Bank Loan B00
6) Bank overdraft Balance on 31-3-2010 150
7) Purchase of
Goodwill
8) Interim dividend paid 3,250
3.250

on equity shares Financing (50)

9) Short term
deposits Ans. : Cash from operating - (250, investing - (100), to same
10) generated by two companies ALtd. and BLtd. belonging
Underwriting Commission paid 8. The information of cash flow
2. How will you industry is as follows:
disclose following items while preparing Cash Flow
IndAS-7 for the year ended
FY, 2009-10

(i) 10% 31st March, 2018? Statement of Gagan Ltd. as per Cash Flow Statement
BLtd. (3)
Debentures issue: Ason
ALtd. ®)
20,000
01-04-2017 1,10,000
As on 31-03-2018
18,000
(ii) Debentures were 77,000 Opening Balance
redeemed at 5% premium at the
Premium was charged to the Profit &Loss end of the year. Cash fAlow from operating Activities 5,000
30,000

Account for the year. Receipts from sale of goods

3,000
Cash from investing activities 20,000
Salaof fxed assets