Explanation Indirect Method: This method is easy as it starts with net profit and makes necessary adjustment by converting accrual basis into cash basis. Firm makes adjustment by adding back all the non cash expenses like depreciation , provision for losses on accounts receivable and similarly reduce non cash revenues and gains from the net profit. IFRS: IFRS stands for international financial reporting standards. It is a set of accounting standards framed by IFRS body and IASB which provide common accounting language for the affairs of business so that accounts of company can be easily comparable and understandable globally. Computation of cash flow from operating activities using direct method: Cash flow from operating activities Particulars Amounts($) Income before interest and taxes 204.750 Adjustment to reconcile income before interest and taxes to net cash provided by operating activities Add: Depreciation 22,000 Add: Deferred compensation expenses 37,000 Add: Bad debt expenses 8,000 Net changes in operating working capital Less: Increase in accounts receivable (5,225) Less: Increase in inventory (9,250) Less: Increase in prepaid expenses (10,000) Add: Increase in accounts payable 34...

3rd Edition

ISBN: 9780136946533

Author: GORDON

Publisher: PEARSON

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Chapter 22, Problem 22.9E

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Cash flow from operating activities of MHA under indirect method as per IFRS format.

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Chapter 22, Problem 22.8E

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Chapter 22 Solutions

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Ch. 22 - Prob. 22.1Q Ch. 22 - Prob. 22.2Q Ch. 22 - Prob. 22.3Q Ch. 22 - Prob. 22.4Q Ch. 22 - Prob. 22.5Q Ch. 22 - How do firms reclassify gains and losses on the...Ch. 22 - Prob. 22.7Q Ch. 22 - Prob. 22.8Q Ch. 22 - Prob. 22.9Q Ch. 22 - Prob. 22.10Q

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Cash flow from operating activities of MHA under indirect method as per IFRS format.

Solution Summary: The author explains the indirect method, which starts with net profit and adjusts by adding back all non-cash expenses like depreciation and provision for losses on accounts receivable.

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Cash flow from operating activities of MHA under indirect method as per IFRS format.

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