In the statement of cash flows, a company is allowed to classify interest paid: In either...

In the statement of cash flows, a company is allowed to classify interest paid:

		In either the operating or financing section under U.S. GAAP.
		Only in the financing section under both IFRS and U.S. GAAP.
		In either the operating or financing section under IFRS.

Expert Solution

Option '3' is correct

In either the Operating or Financing section under IFRS

Interest paid is to be reported as either the Operating or financing section under IFRS. where as under GAAP, interest paid is to be reported only in Operating Cash flows section. International Financial Reporting Standards (IFRS) are perceived to allow more flexibility than Generally Accepted Accounting Principles (GAAP). This flexibility is apparent with regard to classifications within the statement of cash flows.

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