3/20/2023 0 Comments Cashflows of an equipmentThe treatment of interest and dividends, received and paid, depends upon the nature of the enterprise i.e., financial enterprises and other enterprises.Ĭ. Cashflows from interest and dividends received and paid should each be disclosed separately.ī. (b) The above disclosure is in addition to disclosure mentioned in AS-5, ‘Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies’. Some of the examples for extraordinary items is bad debts recovered, claims from insurance companies, winning of a law suit or lottery etc. (a) Any cashflows relating to extraordinary items should as far as possible classify them into operating, investing or financing activities and those items should be separately disclosed in the cashflow statement. This shall be shown separately in the reconciliation statement. (f) The difference amount arise due to changes in exchange rate, should not be included in operating, investing and financing activities. (e) Unrealized gains and losses arising from changes in foreign exchange rates are not cashflows. (d) The effect of changes in exchange rates on cash and cash equivalents held in foreign currency should be reported as a separate part in the form of reconciliation in order to reconcile cash and cash equivalents at the beginning and end of the period. For example, weighted average exchange rate for a period may be used for recording foreign currency transactions. (c) A rate approximates the actual rate may also be used. (b) The reporting should be done by applying the exchange rate at the date of cashflow statement. (a) Cashflows arising from transactions in a foreign currency should be recorded in an enterprises reporting currency. In addition to the general classification of three types of cashflows, AS-3 (Revised) provides for the treatment of the cashflows of certain special items as under: Foreign Currency Cashflows : (d) Cash payments to redeem preference shares. (c) Cash repayments of amounts borrowed, i.e., redemption of debentures, bonds, etc. (b) Cash proceeds from issuing debentures, loans, notes, bonds and other short term borrowings. (a) Cash proceeds from issuing shares or other similar instruments. Cashflows from Financing Activities:įinancing activities are activities that result in changes in the size and composition of the owners’ capital (including preference share capital in the case of a company) and borrowings of the enterprise.įollowing are the examples of cashflows arising from financing activities: (g) Cash receipts and payments relating to futures contracts, forward contracts, option contracts, and swap contracts except when the contracts are held for dealing or trading purposes, or the receipts and payments are classified as financing activities. (f) Cash receipts from the repayments of advances and loans made to third parties (other than advances and loans of a financial enterprise)
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