当前位置:首页 >> 语文 >>

Kieso


Volume 2

23-1

CHAPTER

23

STATEMENT OF CASH FLOWS

Intermediate Accounting IFRS Edition Kieso, Weygandt, and Warfield
23-2

Learning Objectives
1. 2. 3. 4. 5. 6. Describe the purpose of the statement of cash flows. Identify the major classifications of cash flows. Differentiate between net income and net cash flow from operating activities. Contrast the direct and indirect methods of calculating net cash flow from operating activities. Determine net cash flows from investing and financing activities. Prepare a statement of cash flows.

7.
8. 9.
23-3

Identify sources of information for a statement of cash flows.
Discuss special problems in preparing a statement of cash flows. Explain the use of a worksheet in preparing a statement of cash flows.

Statement of Cash Flows

Preparation of the Statement
Usefulness
Classification of cash flows Cash and cash equivalents

Special Problems in Statement Preparation
Adjustments to net income Accounts receivable (net)
Other working capital changes Net losses Disclosures

Use of a Worksheet

Preparation of worksheet
Analysis of transactions Preparation of final statement

Format of statement
Steps in preparation Examples Sources of information Indirect vs. direct method
23-4

Section 1 - Preparation of the Statement of Cash Flows
Primary purpose:
To provide information about a company’s cash receipts and cash payments during a period.

Secondary objective:
To provide cash-basis information about the company’s operating, investing, and financing activities.

23-5

LO 1 Describe the purpose of the statement of cash flows.

Usefulness of the Statement of Cash Flows
Provides information to help assess:
1. Entity’s ability to generate future cash flows.
2. Entity’s ability to pay dividends and obligations.

3. Reasons for difference between net income and net
cash flow from operating activities. 4. Cash and noncash investing and financing transactions.

23-6

LO 1 Describe the purpose of the statement of cash flows.

Classification of Cash Flows
Operating Activities
Income Statement Transactions

Investing Activities
Changes in Investments and Long-Term Asset Items

Financing Activities
Changes in Long-Term Liabilities and Stockholders’ Equity

IFRS allows some flexibility regarding the classification of certain items such as interest, dividends, and taxes.
23-7

LO 2 Identify the major classifications of cash flows.

Classification of Cash Flows

Illustration 23-1 Classification of Typical Cash Inflows and Outflows

23-8

LO 2 Identify the major classifications of cash flows.

Classification of Cash Flows

Illustration 23-1 Classification of Typical Cash Inflows and Outflows

23-9

LO 2

Cash and Cash Equivalents
The basis recommended by the IASB for the statement of

cash flows is actually “cash and cash equivalents.” Cash
equivalents are short-term, highly liquid investments that are both:
? ?

Readily convertible to known amounts of cash, and
So near their maturity that they present insignificant risk of changes in value (e.g., due to changes in interest rates).

Generally, only investments with original maturities of three months or less qualify under this definition.

23-10

LO 2 Identify the major classifications of cash flows.

Classification of Cash Flows
Typical Company Product Life Cycle

23-11

LO 2 Identify the major classifications of cash flows.

Format of the Statement of Cash Flows
Presentation:
1. Operating activities.
2. Investing activities.
Direct Method
Indirect Method

3. Financing activities.
Report inflows and outflows from investing and financing activities separately.

23-12

LO 2 Identify the major classifications of cash flows.

Format of the Statement of Cash Flows
Illustration 23-2

23-13

LO 2 Identify the major classifications of cash flows.

Steps in Preparation
Three Sources of Information:
1. Comparative statements of financial position.
2. Current income statement. 3. Selected transaction data.

Three Major Steps:
Step 1. Determine change in cash. Step 2. Determine net cash flow from operating activities.

Step 3. Determine net cash flows from investing and financing activities.
23-14

LO 2 Identify the major classifications of cash flows.

First Example - 2010
Illustration: Tax Consultants Inc. started on January 1, 2010,
when it issued 60,000 shares of $1 par value common stock for $60,000 cash. The company rented its office space,

furniture, and equipment, and performed tax consulting
services throughout the first year. The comparative statements of financial position at the

beginning and end of the year 2010 appear in Illustration 23-3.
Illustration 23-4 shows the income statement and additional information for Tax Consultants.

23-15

LO 2 Identify the major classifications of cash flows.

First Example - 2010
Illustration 23-3 Comparative Statements of Financial Position, Tax Consultants Inc., Year 1 Illustration 23-3

Illustration 23-4 Income Statement, Tax Consultants Inc., Year 1

23-16

First Example - 2010
Step 1: Determine the Change in Cash
Illustration 23-3

23-17

LO 2 Identify the major classifications of cash flows.

First Example - 2010
Step 2: Determine the Net Cash Flow from Operating Activities
?

Company must determine revenues and expenses on a cash basis.
Eliminate the effects of income statement transactions that do not result in an increase or decrease in cash. Convert net income to net cash flow from operating activities through either a direct method or an indirect method.

?

?

23-18

LO 3 Differentiate between net income and net cash flow from operating activities.

First Example - 2010
Step 2: Determine the Net Cash Flow from Operating Activities Illustration 23-5
Net Income versus Net Cash Flow from Operating Activities

23-19

LO 3 Differentiate between net income and net cash flow from operating activities.

First Example - 2010
Direct Method
Deducts operating cash disbursements from operating cash receipts.
Illustration 23-6

“Net cash provided by operating activities” is the equivalent of cash basis net income.
23-20

LO 4 Contrast the direct and indirect methods of calculating net cash flow from operating activities.

First Example - 2010
Direct Method
Illustration 23-6

Accounts Receivable
1/1/10 Balance Revenues 12/31/10
23-21

Illustration 23-7

0 125,000 36,000

Receipts from customers

89,000

Balance

LO 4

First Example - 2010
Direct Method
Illustration 23-6

Accounts Payable
1/1/10 Payments for expenses 80,000 Balance 0 85,000 5,000
LO 4

Operating expenses 12/31/10 Balance

23-22

First Example - 2010
Direct Method
Illustration 23-6

Income Tax Payable
1/1/10 Payments for taxes 6,000 Balance 0 6,000 0
LO 4

Tax expense 12/31/10 Balance

23-23

First Example - 2010
Indirect Method
Illustration 23-8 Computation of Net Cash Flow from Operating Activities, Year 1—Indirect Method

Common adjustments to Net Income (Loss):
? ? ?
23-24

Depreciation and amortization expense.

Gain or loss on disposition of long-term assets.
Change in current assets and current liabilities.
LO 4

First Example - 2010
Step 3: Determine Net Cash Flows from Investing and Financing Activities
Illustration 23-3

No long-term assets, thus no investing activities.
23-25

LO 5 Determine net cash flows from investing and financing activities.

First Example - 2010
Step 3: Determine Net Cash Flows from Investing and Financing Activities
Illustration 23-3

?

Purchase of common stock for $60,000 (Financing).
LO 5 Determine net cash flows from investing and financing activities.

23-26

First Example - 2010
Step 3: Determine Net Cash Flows from Investing and Financing Activities
Illustration 23-3

? ?
23-27

Net income of $34,000 (Operating). Dividends paid of $(14,000) (Financing).
LO 5 Determine net cash flows from investing and financing activities.

First Example - 2010
Statement of Cash Flows - 2010
Illustration 23-9

23-28

LO 6 Prepare a statement of cash flows.

Operating Activities — Indirect Method
E23-6: Norman Company’s financial statements for the year ended December 31, 2010, contained the following condensed information.
2010 840,000 624,000 60,000 26,000 130,000 40,000 90,000 37,000 46,000 4,000 59,000 31,000 8,500 ( 22,000) 15,000 (4,500)
LO 4

2009

Change

Revenues from fees Operating expenses Depreciation expense Loss on sale of equipment Income before income tax Income tax Net income Accounts receivable Accounts payable Income taxes payable
23-29

Operating Activities — Indirect Method
E23-6: Prepare the operating activities section of the statement of cash flows using the indirect method (Step 2).

Cash flows from operating activities Net income Adjustment to reconcile net income to net cash provided by operating activities: Depreciation expense Loss on sale of equipment Decrease in accounts receivable Increase in accounts payable Decrease in income taxes payable Net cash provided by operating activities
23-30

$

90,000

60,000 26,000 22,000 15,000 (4,500) 208,500
LO 4

Advance slide to uncover solution

Operating Activities — Direct Method
E23-5: Norman Company’s financial statements for the year ended December 31, 2010, contained the following condensed information.
2010 840,000 624,000 60,000 26,000 130,000 40,000 90,000 37,000 46,000 4,000 2009 Change

Revenues from fees Operating expenses Depreciation expense Loss on sale of equipment Income before income tax Income tax Net income Accounts receivable Accounts payable Income taxes payable
23-31

Assume accounts payable relates to operating expenses.

59,000 31,000 8,500

( 22,000) 15,000 (4,500)
LO 4

Operating Activities — Direct Method
E23-5: Prepare the operating activities section of the statement of cash flows using the Direct method (Step 2).
Illustration 23-22

Accounts Receivable
1/1/10 Balance
Revenues 12/31/10 Balance

59,000
840,000 37,000

Receipts from customers

862,000

23-32

LO 4 Contrast the direct and indirect methods of calculating net cash flow from operating activities.

Operating Activities — Direct Method
E23-5: Prepare the operating activities section of the statement of cash flows using the Direct method (Step 2).
Illustration 23-24

Accounts Payable
1/1/10 Payments to suppliers 609,000 Balance 31,000 624,000 46,000

Operating expenses 12/31/10 Balance

23-33

LO 4 Contrast the direct and indirect methods of calculating net cash flow from operating activities.

Operating Activities — Direct Method
E23-5: Prepare the operating activities section of the statement of cash flows using the Direct method (Step 2).
Illustration 23-24

Income Tax Payable
1/1/10 Payments for income tax 44,500 Balance 8,500 40,000 4,000

Income tax expense 12/31/10 Balance

23-34

LO 4 Contrast the direct and indirect methods of calculating net cash flow from operating activities.

Operating Activities — Direct Method
E23-5: Prepare the operating activities section of the statement of cash flows using the Direct method (Step 2).
Cash flows from operating activities Cash receipts from customers Cash paid for operating expenses Cash paid for income taxes Net cash provided by operating activities $ $ 862,000 (609,000) (44,500) 208,500

23-35

LO 4 Contrast the direct and indirect methods of calculating net cash flow from operating activities.

Step 3: Determine Net Cash Flow from Investing and Financing Activities
E23-2 (a): Plant assets that had cost 25,000 6 years before
and were being depreciated on a straight-line basis over 10 years with no estimated scrap value were sold for 5,300.
Plant assets (cost) Accumulated depreciation ([25,000 / 10] x 6) Book value at date of sale Sale proceeds Loss on sale
23-36

25,000 15,000 10,000 (5,300) 2,700

LO 5

Determine net cash flows from investing and financing activities.

Statement of Cash Flows (a,b,d,h)
Statement of Cash Flows Cash flow from operating activities Net income (loss) ( 50,000) 2,700 22,000 (9,000) (34,300) 5,300 39,000 44,300 330,000 (47,000) 283,000 293,000

O

Adjustment to reconcile net income to cash: Loss on sale Depreciation expense Gain on sale Cash from operations Cash flow from investing activities Sale of plant assets Sale of land Cash from investing activities Cash flow from financing activities Sale of common stock Purchase of company stock Cash from financing activities Net Change in Cash

I F

23-37

E23-2 (b)
E23-2 (b): During the year, 10,000 shares of common stock

with a stated value of $10 a share were issued for $33 a
share.

Shares sold Market value per share Value of shares $ $

10,000 33 330,000

23-38

LO 5 Determine net cash flows from investing and financing activities.

Statement of Cash Flows (a,b,d,h)
Statement of Cash Flows Cash flow from operating activities Net income (loss) ( 50,000) 2,700 22,000 (9,000) (34,300) 5,300 39,000 44,300 330,000 (47,000) 283,000 293,000

O

Adjustment to reconcile net income to cash: Loss on sale Depreciation expense Gain on sale Cash from operations Cash flow from investing activities Sale of plant assets Sale of land Cash from investing activities Cash flow from financing activities Sale of common stock Purchase of company stock Cash from financing activities Net Change in Cash

I F

23-39

E23-2 (d)
E23-2 (d): The company sustained a net loss for the year of

$50,000. Depreciation amounted to $22,000, and a gain of
$9,000 was realized on the sale of land for $39,000 cash.

23-40

LO 5

Determine net cash flows from investing and financing activities.

Statement of Cash Flows (a,b,d,h)
Statement of Cash Flows Cash flow from operating activities Net income (loss) ( 50,000) 2,700 22,000 (9,000) (34,300) 5,300 39,000 44,300 330,000 (47,000) 283,000 293,000

O

Adjustment to reconcile net income to cash: Loss on sale Depreciation expense Gain on sale Cash from operations Cash flow from investing activities Sale of plant assets Sale of land Cash from investing activities Cash flow from financing activities Sale of common stock Purchase of company stock Cash from financing activities Net Change in Cash

I F

23-41

E23-2 (h)
E23-2 (h): During the year, treasury stock costing $47,000

was purchased.

23-42

LO 5

Determine net cash flows from investing and financing activities.

Statement of Cash Flows (a,b,d,h)
Statement of Cash Flows Cash flow from operating activities Net income (loss) ( 50,000) 2,700 22,000 (9,000) (34,300) 5,300 39,000 44,300 330,000 (47,000) 283,000 293,000

O

Adjustment to reconcile net income to cash: Loss on sale Depreciation expense Gain on sale Cash from operations Cash flow from investing activities Sale of plant assets Sale of land Cash from investing activities Cash flow from financing activities Sale of common stock Purchase of company stock Cash from financing activities Net Change in Cash

I F

23-43

Sources of Information for the Statement of Cash Flows
1. Comparative statements of financial position.
2. An analysis of the Retained Earnings. 3. Writedowns, amortization charges, and similar “book”

entries, such as depreciation, because they have no effect on cash.

23-44

LO 7 Identify sources of information for a statement of cash flows.

Net Cash Flow from Operating Activities— Indirect Versus Direct Method
Adjustments Needed to Determine Net Cash Flow from Operating Activities.
Illustration 23-18

23-45

LO 7

Net Cash Flow from Operating Activities— Indirect Versus Direct Method
Direct Method
Companies adjust each item in the income statement from the accrual basis to the cash basis.

Illustration 23-21 23-46

LO 7

Net Cash Flow from Operating Activities— Indirect Versus Direct Method

23-47

Adjustments for cash flows from operating activities---direct method
?

Cash receipts from customers= Revenue from sales+ Decrease in AR- Increase in AR Cash payments to suppliers= Cost of good sold + increase in inventory-decrease in inventory + decrease in AP-increase in AP Cash payments for operating expenses= Operating expenses+increase in prepaid expense-decrease in prepaid expense+decrease in accrued expenses payableincrease in accrued expenses payable

?

?

23-48

Net Cash Flow from Operating Activities— Indirect Versus Direct Method
Direct Versus Indirect Controversy
In Favor of the Direct Method
? ?

Shows operating cash receipts and payments. Information about cash receipts and payments is more revealing of a company’s ability
1. to generate sufficient cash from operating activities to pay its debts, 2. to reinvest in its operations, and 3. to make distributions to its owners.

23-49

LO 7 Identify sources of information for a statement of cash flows.

Net Cash Flow from Operating Activities— Indirect Versus Direct Method
Direct Versus Indirect Controversy
In Favor of the Indirect Method
?

Focuses on the differences between net income and net cash flow from operating activities. Provides link between the statement of cash flows and the income statement and statement of financial position.

?

23-50

LO 7 Identify sources of information for a statement of cash flows.

Adjustments to Net Income
Depreciation and Amortization
? ?

Amortization of limited-life intangible assets. Amortization of bond discount or premium.

Postretirement Benefit Costs
?

Company must adjust net income by the difference

between cash paid and the expense reported.

23-51

LO 8 Discuss special problems in preparing a statement of cash flows.

Adjustments to Net Income
Changes in Deferred Income Taxes
?

Affect net income but have no effect on cash.

Equity Method of Accounting
?

Net increase in the investment account does not affect cash flows.

?

Company must deduct the net increase from net income to arrive at net cash flow from operating activities.

23-52

LO 8 Discuss special problems in preparing a statement of cash flows.

Adjustments to Net Income
Loss and Gains
?

A loss is added to net income to compute net cash flow from operating activities because the loss is a non-cash charge in the income statement.

?

Company reports a gain in the statement of cash flows as
part of the cash proceeds from the sale of equipment under investing activities, thus it deducts the gain from net income to avoid double-counting—once as part of net income and again as part of the cash proceeds from the sale.

23-53

LO 8 Discuss special problems in preparing a statement of cash flows.

Adjustments to Net Income
Share-Based Compensation
? ?

Cash is not affected by recording the expense. The company must increase net income by the amount of compensation expense from share options in computing net cash flow from operating activities.

23-54

LO 8 Discuss special problems in preparing a statement of cash flows.

Accounts Receivable (Net)
Indirect Method
Because an increase in Allowance for Doubtful Accounts results from a charge to bad debt expense, a company should add back an increase in Allowance for Doubtful Accounts to net income to arrive at net cash flow from operating activities.

Illustration 23-28 Accounts Receivable Balances, Redmark Co. 23-55

LO 8 Discuss special problems in preparing a statement of cash flows.

Accounts Receivable (Net)
Indirect Method
One method of presenting this information in the statement
of cash flows:
Illustration 23-29

23-56

LO 8 Discuss special problems in preparing a statement of cash flows.

Accounts Receivable (Net)
Indirect Method
Alternate method (net approach) of presenting this
information in the statement of cash flows:
Illustration 23-30

23-57

LO 8 Discuss special problems in preparing a statement of cash flows.

Accounts Receivable (Net)
Direct Method
Company should not net Allowance for Doubtful Accounts
against Accounts Receivable.
Illustration 23-31

23-58

LO 8 Discuss special problems in preparing a statement of cash flows.

Accounts Receivable (Net)
Direct Method
Company should not net Allowance for Doubtful Accounts
against Accounts Receivable.
Illustration 23-31

Cash sales should be reported at $85,000 ($100,000 - 9,000 - 6,000).
23-59

Increase in Accounts Receivable

LO 8

Other Working Capital Changes
Some changes in working capital, although they affect cash, do not affect net income.
? ?

Purchase of short-term non-trading equity investments. Issuance of a short-term non-trade note payable for cash.

?

Cash dividend payable.

23-60

LO 8 Discuss special problems in preparing a statement of cash flows.

Net Loss
Illustration: If the net loss is $50,000 and the total amount of charges to add back is $60,000, then net cash provided by operating activities is $10,000.

Illustration 23-33 Computation of Net Cash Flow from Operating Activities—Cash Inflow

23-61

LO 8 Discuss special problems in preparing a statement of cash flows.

Disclosures
Significant Non-Cash Transactions
Common non-cash transactions that a company should

disclose:
1. Acquisition of assets by assuming liabilities (including finance lease obligations) or by issuing equity securities.

2. Exchanges of non-monetary assets.
3. Refinancing of long-term debt. 4. Conversion of debt or preference shares to ordinary shares. 5. Issuance of equity securities to retire debt.
23-62

LO 8 Discuss special problems in preparing a statement of cash flows.

Disclosures
Special Disclosures
IFRS requires companies to disclose:
? ?

Cash paid for taxes.
Cash flows from interest and dividends received and paid.

The category (operating, investing, or financing) that each item was included in must be disclosed as well.

23-63

LO 8 Discuss special problems in preparing a statement of cash flows.

Use of a Worksheet
A worksheet involves the following steps.
Step 1. Enter the statement of financial position accounts and their beginning and ending balances in the statement of financial position accounts section. Step 2. Enter the data that explain the changes in the statement of financial position accounts and their effects on the statement of cash flows in the reconciling columns of the worksheet. Step 3. Enter the increase or decrease in cash on the cash line and at the bottom of the worksheet. This entry should enable the totals of the reconciling columns to be in agreement.
23-64

LO 9 Explain the use of a worksheet in preparing a statement of cash flows.

?

Companies preparing financial statements under U.S. GAAP must prepare a statement of cash flows as an integral part of the financial statements.

?

Both IFRS and U.S. GAAP require that the statement of cash flows should have three major sections—operating, investing, and financing— along with changes in cash and cash equivalents.
Similar to IFRS, the cash flow statement can be prepared using either the indirect or direct method under U.S. GAAP. For both IFRS and U.S. GAAP, companies choose for the most part to use the indirect method for reporting net cash flow from operating activities.

?

23-65

?

U.S. GAAP encourages companies to disclose the aggregate amount of cash flows that are attributable to the increase in operating capacity separately from those cash flows that are required to maintain operating capacity. The definition of cash equivalents used in IFRS is similar to that used in U.S. GAAP. IFRS requires that non-cash investing and financing activities be excluded from the statement of cash flows. Instead, these non-cash activities should be reported elsewhere.

?

?

23-66

Copyright
Copyright ? 2011 John Wiley & Sons, Inc. All rights reserved.

Reproduction or translation of this work beyond that permitted in
Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful.

Request for further information should be addressed to the
Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

23-67


相关文章:
kieso15e_testbank_ch08
kieso15e_testbank_ch08_教育学_高等教育_教育专区 暂无评价|0人阅读|0次下载|举报文档kieso15e_testbank_ch08_教育学_高等教育_教育专区。CHAPTER 8 VALUATION ...
《中级会计学》Kieso_IFRS_TestBank_Ch02
《中级会计学》Kieso_IFRS_TestBank_Ch02 - CHAPTER 2 CONCEPTUAL FRAMEWORK UNDERLYING FINANCIAL ACCOUNTING ...
人力资源与人力资本的概念分析论文
(3)商誉反映的是企业总价值超过其各项有形资产和无形资产的净额,即一 个总的计价账户,还是 Kieso 和 Weygrandt 在其合著的《中级财务会计》里所概 括的两种...
上海海事大学与美国圣马丁大学合作举办
KIESO 5.财务管理 FOUNDATIONS OF FINANCIAL MANAGEMENT(13th EDITION) STANLEY B. BLOCK/ GEOFFREY A. HIRT 6.商业法 BUSINESS LAW(13th EDITION) JANE P. ...
intermediate accounting(fifteenth edition) ch21
Kieso, Intermediate Accounting, 15/e, Solutions Manual (For Instructor Use Only) BRIEF EXERCISE 21-10 Lease Receivable ... Equipment ......
人力资本在企业商誉中的实质地位
(3)商誉反映的是企业总价值超过其各项有形资产和无形资产的净额, 即一个总的计价账户,还是 Kieso 和 Weygand 在其合著的《中级财务会计》里所概括的两种观点—...
上海海事大学与美国圣马丁大学合作举办
KIESO 5.财务管理 FOUNDATIONS OF FINANCIAL MANAGEMENT(13th EDITION) STANLEY B. BLOCK/ GEOFFREY A. HIRT 6.商业法 BUSINESS LAW(13th EDITION) JANE P. ...
上海海事大学与美国圣马丁大学合作举办
KIESO 5.财务管理 FOUNDATIONS OF FINANCIAL MANAGEMENT(13th EDITION) STANLEY B. BLOCK/ GEOFFREY A. HIRT 6.商业法 BUSINESS LAW(13th EDITION) JANE P. ...
CH18[1]唐纳德中级会计答案
Copyright ? 2010 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 13/e, Solutions Manual (For Instructor Use Only) 18-1 ...
(以修改完毕)人力资本与企业商誉的经济实质
(3)商誉反映的是企业总价值超过其各项有形 资产和无形资产的净额,即一个总的计价账户,还是 Kieso 和 Weygrandt 在其合著的《中级 财务会计》里所概括的两种...
更多相关标签: