Question

Permata Berhad’s Statement of Comprehensive Income and Statement of Financial Position are given below.

Statement of Comprehensive Income for the year ended 31 December 2019
	$’000
Revenue (Sales)	1,440
Cost of goods sold	(140)
Staff cost	(180)
Depreciation	(200)
Loss on sale of plant	(30)
	890
Interest expense	(40)
Gain on sale of investment	25
Income from investment	50
Profit before taxation	925
Taxation	(210)
Profit after taxation	715
Other Comprehensive Income
Surplus on revaluation of land	100
Total comprehensive income	815

Statement of Financial Position as at 31 December 2019
	2019		2018
	$’000		$’000
Equity
Ordinary shares	1,320		1,100
Revaluation reserve	210		110
Retained earnings	913		320
Non-Current Liabilities
8% Debentures	400		450
6% Redeemable preference shares	500		550
Current Liabilities
Bank overdraft	80		120
Trade payables	55		42
Tax payable	10		25
Total Equity and Liabilities	3,488		2,717
Non-Current Assets Land and building (revalued)	1,750		1,650
Accumulated depreciation – building	(120)		(110)
Plant and machinery – carrying value	1,170		790
Development expenditure	478
Investment	110		280
Current Assets
Inventories	40		56
Trade receivables	33		20
Cash in hand	27		31
Total Assets	3,488		2,717

Additional information:

1. Dividends paid during the year on preference shares were $50,000 and on ordinary shares were $72,000.

2. A plant was disposed of for $200,000. Its carrying amount was $230,000.

3. Land was revalued and surplus on revaluation was $100,000. No property was acquired or disposed during the year.

4. There was no amortization of development expenditure.

5. No new investments were acquired.

6. Preference shares and debentures were redeemed. No premium was paid for the redemption.

Required:

Prepare the Statement of Cash Flows for Permata Berhad for the year ended 31 December 2019 using the Direct Method.                                                                                                    

Answer 1

Permata Berhad
Cash Flow statement ( Direct Method)
For the year ended 31 December ,2019		($ in '000')
Particulars		Amount	Working
Cash flows from operating activities
Cash received from accounts receivable	1,427		(20+1,440-33)
Cash paid to accounts payable	-111		(42+140-55-16)
Income Tax Paid	-225		(25+210-10)
Cash paid for Staff cost & Interest Expense	-260		(120+180+40-80)
Cash flows from operating activities		831
Cash flows from investing activities
Sale of plant	200		Given
Sale of Investment	195		(280-110+25)
Income from investment	50		Given
Development Expenditure	-478		Given
Purchase of Plant	-800		(370-1,170)
Cash flows from investing activities		-833
Cash flows from financing activities
Redemption of Preference Shares	-50		(500-550)
Dividend Paid	-122		(50+72)
Redemption of Debentures	-50		(400-450)
Proceeds from issue of ordinary shares	220		(1,320-1,100)
Cash flows from financing activities		-2
Net increase in cash and cash equivalents (A)		-4
Cash and cash equivalents at beginning of period (B)		31
Cash and cash equivalents at end of period =A+B		27