IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

Chapter 5 / Cash Flow Statement s (lA S 7)

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Practical Insight The term used is "significant," which has not been defined in lAS 7. This may cause interpre– tational problems while applying this provision of lAS 7 in practice. (2) Recommended disclosures. Entities are encouraged to make these disclosures, together with a commentary by management: a] Amount of undrawn borrowing facilities, indicating restrictions on their use, if any b) In case of investment s in joint ventures, which are accounted for using proportionate consolidation, the aggregate amount of cash flows from operating, investing, and fi– nancing activities that are attributable to the investment in the joi nt venture c] Aggregate amount of cash flows that are attributable to the increase in operating capac– ity separately from those cash flows that are requ ired to maintain operating capacity d] Amount of cash flows segregated by reported industry and geog raphical segments Practical In sight These "recommended" disclosures are unique to lAS 7. Such disclosures are not required un– der other accounting standards (not even under U.S. generally accepted accounting principles). They are useful in enabling the users of financial statements to under stand the enterprise' s fi– nancial position better. This case study shows the preparation of the cash flow statement under lAS 7 under the direct and indirect methods. Facts Financial information for Tremendous Enterprises Inc. for the year ended December 3 1, 2005, follows: Tremendous Enterprises II/c. BALANCE SHEETS As of Decemb er 31, 2005, and 2004 2005 Assets Cash and cash equivalents Trade receivables Inventory Comprehensive Case Study

$ 4,500 7,500 3,000 1,500

$ 1,500 3,750 2,250 2,250

Intangib le asset, net Due from associates Property, plant, and equipment, cost Accumulated depreciation Property, plant, and equipment, net Total assets Liabilities Accounts payable Income taxes payable Deferred taxes payable Total liabilities Shareholders 'eql/iry Share capital Retained earnings Total shareholders' equity Total liabilities and shareholders' equity

28,500 18,000 (7500) 10500

28,500 33,750 (9 000) 24 750

$5.5...500

$63..QQQ

$ 7,500 3,000 4500 15 000 9,750 30750 40500 $5.5...500

$18,750 1,500 ..J....Q.QQ 23250 9,750 30000 .:22..12Q $63..illill