Question

Required:
Prepare the statement of cash flows assuming that Bluebonnet prepares its financial statements according to International Financial Reporting Standards. Where IFRS allows flexibility, use the classification used most often in IFRS financial statements.

 

E 4–13.

 

Answer 1

Cash collected for interest, considered an operating cash flow by U.S. GAAP, could be classified as either an operating cash flow or an investing cash flow according to International Financial Reporting Standards.

 

Cash paid for interest, considered an operating cash flow by U.S. GAAP, could be classified as either an operating cash flow or a financing cash flow according to International Financing Reporting Standards.

 

Cash paid for dividends, considered a financing cash flow by U.S. GAAP, could be classified as either an operating cash flow or a financing cash flow according to International Financial Reporting Standards.

 

Accordingly, the statement of cash flows prepared according to IFRS could be the same as under U.S. GAAP (E4–13) or could be presented as follows:

 

            BLUEBONNET BAKERS

          Statement of Cash Flows

For the Year Ended December 31, 2021

 

Cash flows from operating activities:

          Cash received from customers             $ 380,000

          Cash paid for merchandise                    (160,000)

          Cash paid for salaries                              (90,000)
            Net cash flows from operating activities                  $130,000

 

Cash flows from investing activities:

          Collection of notes receivable                     50,000

          Interest on notes receivable                         6,000

          Sale of investments                                     30,000

          Purchase of equipment                             (85,000)

           Net cash flows from investing activities                       1,000

 

Cash flows from financing activities:

          Issuance of notes payable                       100,000

          Payment of notes payable                        (25,000)

          Interest on notes payable                          (5,000)

          Dividends paid to shareholders              (20,000)                  

           Net cash flows from financing activities                       50,000

 

Net increase in cash                                                                  181,000

 

Cash and cash equivalents, January 1                                     17,000

 

Cash and cash equivalents, December 31                         $ 198,000

Cash and cash equivalents, December 31                         $ 198,000