Illustration of consolidated cashflow statements, Financial Accounting

Illustration of consolidated cashflow statements

The voice of the Nation Limited is a Nairobi based media company. Its Consolidated Income Statement for the year ended 30 April 2003, and its Consolidated Balance Sheets as at 30 April 2002 and 2003 are as follows:

 

Consolidated Income Statement for the year ended 30 April 2003

 

 

Consolidated Balance Sheet

as at 30 April

2003

Sh.million

2002

Sh.million

 

 

Sh.million

Non-current assets:

 

 

Sales

Cost of sales

Gross profit

Distribution costs

Administrative expenses

Operating profit

Finance costs: Int expense

Share of results of associate

Profit before tax

Tax: Group companies

         Share of associate

Profit before minority interest

Minority interest

Profit after tax

 

 

 

 

 

 

 

 

 

(110)

  (15)

 3,325

(1,935)

 1,390

   (225)

  (790)

    375

       (8)

       50

    417

 

  (125)

    292

     (28)

    264

 

Property, plant and equip.

     (Cost or Valuation)

     Accumulated Depreciation

Intangible asset: Goodwill

                      Amortisation

 

Investment in associate

 

Current assets:

Inventories

Receivables and prepayments

Cash and cash equivalents

 

 

2,297

(931)

1,366

126

(30)

96

   263

1,725

 

276

607

93

976

 

 

2,134

(733)

1,401

126

(17)

109

   246

1,756

 

178

623

71

872

 

 

Additional information:

 

Current Liabilities:

Payables and accrued expenses

Current tax

Borrowings: bank overdraft

 

Net current assets

 

Capital and reserves:

Share capital

Revaluation reserve

Retained earnings

Shareholders’ funds

Minority interest

Non-current liabilities:

Borrowings: commercial paper

Deferred tax

 

615

22

8

645

   331

2,056

 

 

500

260

   839

1,599

240

 

110

107

   217

2,056

 

484

16

133

645

   331

1,940

 

 

500

133

   725

1,413

204

 

200

123

   323

1,940

1.

The holding company, the subsidiary and the associate had all paid dividends during the year.

 

A class of assets in the subsidiary had been revalued during the year.  Depreciation of Sh.20 million had been written back on the revaluation.  The transfer to the revaluation surplus account in the subsidiary was Sh.120 million.  The minority interest owns 40% of the share capital of the subsidiary.

 

Property, plant and equipment which had cost Sh.100 million and on which accumulated depreciation stood at Sh.47 million at 30 April 2002 was sold for Sh.70 million in the year.

 

The group classifies interest paid as an operating cash flow, there were no accruals at the beginning or at the end of the year in respect of this item.  It classifies dividends received as an investing activity and any dividends paid as an investing activity.  The bank overdraft is classified as a component of each and cash equivalent.

 

Required:

 

Prepare the Consolidated Cash flow Statement for the year ended 30 April 2003 for the group using the indirect method.  


 

 

 

Solution

 

Voice of Nations Ltd.

Consolidated cashflow statement for the year ended 30 April 2003

 

Sh m

Sh. m

Cashflows from operating activities

 

 

Group profits before tax

417

 

Adjustments – cash items

 

 

Depreciation

265

 

Amortization of goodwill

13

 

Profit on disposal of PPE (70 – (100 – 47)

(17)

 

Interest expense

8

 

Share of results in associate company

(50)

 

 

636

 

Changes in making capital

 

 

Increase in inventory

(98)

 

Decrease in debtors and prepayment

16

 

Increase in payables

131

 

Cash from operations

685

 

Less interest paid

(8)

 

Tax paid

(120)

 

Net cash received from operating activities

 

557

Cashflows from investing activities

 

 

Cash proceeds on sale of PPE

70

 

Acquisition of PPE

(163)

 

Dividends from associate company

   18

 

Net cash used  in investing activities

 

(75)

Cash flows from financing activities

 

 

Dividends paid – Group

(150)

 

                           Minority interest

(40)

 

Repayment of commercial paper

  (90)

 

Net cash used in financing activities

 

(280)

Net cash used in financing activities

 

202

Net increase in cash and cash equivalents b/d

 

(117)

Cash and cash equivalents c/d

 

   85

 

 

 

NOTE:  Cash and cash equivalents

 

 

 

B/d sh m

C/d Sh. M

Cash  and cash equivalents

71

93

Bank overdraft

(188)

(8)

Short term investments

     -

     -

 

(117)

  85

 

Workings

 

 

1.       Depreciation

 

Depreciation account

 

Sh m

 

Sh m

PPE – Revaluation

20

Disposal

100

Disposal

47

Profit and loss

265

Balance c/d

931

 

 

 

998

 

998

 

 

2.       Tax

 

Tax account

 

Sh m

 

Sh m

Balance c/d

120

Balance b/d – def

123

Balance c/d – def

107

Current tax

16

Current

22

Profit and loss

110

 

249

 

249

 

3.       Acquisition of PPE

 

PPE cost account

 

Sh m

 

Sh m

Balance b/d

2,134

Disposal

100

Revaluation reserve - gain

120

Depreciation on revaluation

20

Cash book

163

 

 

 

 

Balance c/d

2,297

 

2,417

 

2,417

 

 

4.       Dividends from associate company

 

PPE cost account

 

Sh m

 

Sh m

Balance b/d

246

Share of tax

15

Share of PBT

50

Dividends

18

 

 

 

 

 

 

Balance c/d

263

 

296

 

296

 

 

 

 

5.       Dividends paid

 

Group retained profits

 

Sh m

 

Sh m

Dividend balance figure

150

Balance b/d

725

Balance c/d

839

Profit after tax & MI

264

 

989

 

989

 

 

6.                                                           Minority interest account

 

Sh m

 

Sh m

Dividend balance figure

40

Balance b/d

204

Balance  c/d

240

Revenue reserve

48

 

 

Profit after tax

28

 

280

 

280

 

 

 

Posted Date: 12/12/2012 5:42:57 AM | Location : United States







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