Question 2 Plate Limited Statement of Cash Flow for the year ended 31 December Year 1 Sm Sm Cash flows from operating activities Net profit before interest and tax 139 Adjustments for: Amortization on intangible assets Depreciation 7 22 Gain on disposal of non-current assets (6) (working (ii)) Financial assets written off Gain on disposal of financial assets (working (v)) Operating profit before working capital changes 15 (45) 132 Increase in inventories (246-128) (118) Increase in trade receivables (509-335) (174) Decrease in accounts payable (244-311) (67) Cash generated from operations (227) Interest paid (working (vi)) (28) Income tax paid (working (vii)) (7) Net cash used in operating activities (262) Cash flows from investing activities Purchase of intangible assets (working (i)) (50) Purchase of non-current assets (working (ii)) (438) Purchase of financial assets (40) Proceeds from sale of financial assets 50 Proceeds from sale of tangible assets 250 Increase in short-term investment (50-30) (20) Interest income received 79 Net cash used in investing activities (169) Cash flows from financing activities Proceeds from issue of ordinary share capital Proceeds from additional bank loan (759-557) Dividend paid 75 202 (49) Net cash generated from financing activities 228 Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year (203) (185) (388) Workings: All figures in $m (i) Purchase of intangible assets: Balance at 1.1 Year 1 Amortization Addition (balance) Balance at 31.12.Year 1 (ii) Gain on disposal of non-current assets: 234 (7) 50 277 Sales proceeds Cost 250 (244) Gain on disposal (iii) Purchase of non-current assets: Balance at 1.1 Year 1 600 Depreciation (22) Revaluation 251 Disposal (244) Addition (balance) 438 1.023 Balance at 31.12.Year 1 (iv) Cost on disposal of financial assets: Balance at 1.1 Year 1 Written down Additions Disposal (balance) Balance at 31.12.Year 1 (v) Gain on disposal of financial assets: 200 (15) 40 (5) 220 Sales proceeds Cost Gain on disposal 555 50 (5) 45 (vi) Interest paid: Balance at 1.1 Year 1 22 Interest expense during year 55 Payment (balance) (28) Balance at 31.12.Year 1 49 (vii) Tax paid: Balance at 1.1 Year 1 Tax charged in income statement Payment (balance) Balance at 31.12.Year 1 2267 25 24 (7) 42 ACT B332F Company Accounting II HKAS 7 Statement of Cash Flows Tutorial Exercises Question 1 What are the advantages of including the Statement of Cash Flows in the Corporate Annual Report? Question 2 The financial statements of Plate Limited for the financial year 1 are as follows: Statement of Financial Position at 31 December ASSETS Non-Current Assets Intangible assets Tangible assets Financial assets Current Assets Year 1 Year 0 Sm Sm 277 234 1,023 600 220 200 1.520 1,034 Inventories 246 128 Trade Receivable 509 335 Short-term investments 50 30 Total current assets 805 493 Total assets 2,325 1,527 EQUITY AND LIABILITIES Ordinary shares capital 476 401 Revaluation surplus 251 Retained profits 116 26 843 427 Non-current liabilities Long-term bank loans 759 557 Current liabilities Bank overdraft 388 185 Trade payables 244 311 Interest payables 49 22 Tax payables 42 25 Total current liabilities 723 543 Total liabilities 1,482 1,100 Total equity and liabilities 2,325 1,527 The statement of profit or loss and other comprehensive income for the year ended 31 December Year 1 Sm Revenue 1,162 Cost of goods sold (866) Gross profit 296 Distribution costs (47) Administrative expenses (110) Net profits before interest and tax 139 Interest Income 79 Finance cost (55) Profit before tax 163 Taxation (24) Profit for the period 139 Retained profit as at 1 January Year 1 26 Dividend paid (49) Retained profit as at 31 December Year 1 116 Other supplemental information: 1. The operating profit is after charging depreciation on the non-current asset of $22 million and amortization on the intangible non-current assets of $7 million. 2. During the year ended 31 December Year 1, plant and machinery costing $1,464 million, net book value of $244 million, was sold for $250 million. 3. During the year, some financial assets were written down by $15m to reflect the permanent diminution in value. Additional financial assets were purchased on 31 December Year 1 for $40m. Other financial assets were disposed of for a value of $50m during year. 4. During the year ended 31 December Year 1, 25 million shares were issued at $3.0. Required: (a) Prepare the statement of cash flows for Plate Limited for the year ended 31 December Year 1, using indirect method. (b) Explain the treatment of depreciation charge and of the dividends paid. (Work to the nearest million.) תז