Alex Thompson the owner-president of Computer Services Company, is unfamiliar with the statementof cash flows that you, as his accountant, prepared. He asks for further explanation. Instructions Write him a brief memo explaining the form and content of the statement of cash flows. The cash flow statement on below. EM-BINUS-AA-FPU-78/V2ROChanges in operating assets and liabilities:Derivative financial instrumentsNotes and accounts receivable, netReceivables from related partiesOther receivables from related partiesInventories(32,189)(14,131,066)(204,278)50,589122,47218,578(312,251)(22,311)(11,947,191)(168,047)(63,258)(12,989,916)53,182Other financial assetsOther current assets648,051Accounts payablePayables to related partiesSalary and bonus payableAccrued profit sharing to employees and bonus to directors and supervisorsAccrued expenses and other current liabilitiesProvisions3,656,358346,401850,094(605,182)883,9251,386,7971,552,2102,105,298Accrued pension costCash generated from operationsIncome taxes paid3,531,0171,595,8109,554361,846,606(14,463,069)2,051,785977,901(5,769)296,275,199(11,312,039)Net cash generated by operating activities347,383,537284,963,160CASH FLOWS FROM INVESTING ACTIVITIESAcquisitions of:Available-for-sale financial assetsHeld-to-maturity financial assets(21,303)(31,525,876)(1,795,949)(27,165)(287,594,773)(2,750,361)(56,512)(246,137,361)(1,782,299)Financial assets carried at costProperty, plant and equipmentIntangible assetsProceeds from disposal or redemption of:Available-for-sale financial assets2,418,578964,367Held-to-maturity financial assets5,145,8502,711,440Financial assets carried at cost67,986353,656Property, plant and equipmentOther assets157,48426,688173,554Costs from entering into hedging transactionsInterest received(143,982)1,790,7251,719,026Other dividends received506,14371,057Dividends received from associates2,141,881Refundable deposits paidRefundable deposits refundedNet cash outflow from deconsolidation of subsidiary (Note 34)2,088,472(517,162)2,609,313(98,888)113,399(979,910)Net cash used in investing activities(281,054,215)(269,317,707) 20132012CASH FLOWS FROM OPERATING ACTIVITIESIncome before income tax$215,487,122181,676,456Adjustments for:Depreciation expenseAmortization expenseStock option compensation cost of subsidiaryFinance costs153,979,8472,202,0225,3122,646,776(3,972,031)(1,835,980)(48,848)129,168,5142,180,7756,2191,020,422(2,073,729)(1,645,036)(103)444,5054,231,602(399,598)(141,491)(4,977)Share of profits of associates and joint ventureInterest incomeGain on disposal of property, plant and equipment and intangible assets, netImpairment loss on property, plant and equipmentImpairment loss of financial assetsGain on disposal of available-for-sale financial assets, netGain on disposal of financial assets carried at cost, netLoss (gain) on disposal of investments in associatesGain on deconsolidation of subsidiaryUnrealized gross profit on sales to associatesLoss (gain) on foreign exchange, netDividend income352,214(1,267,086)(44,721)733(293,578)20,870317,547(506,143)(9,977)25,029(3,219,144)(71,057)(886)Income from receipt of equity securities in settlement of trade receivablesLoss on hedging instrumentsGain on arising from changes in fair value of available-for-sale financial assets inhedge effective portion5,602,779(5,071,118)

A cash flow statement is such type of statement in which it is shown from which sources and from…

Answered: Write him a brief memo explaining the…

Business

Accounting

Write him a brief memo explaining the form and content of the statement of cash flows.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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