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

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

Corporate Fin Focused Approach
Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter2: Financial Statements, Cash Flow, And Taxes
Section: Chapter Questions
Problem 14SP
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Alex Thompson the owner-president of Computer Services Company, is unfamiliar with the statement
of 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/V2RO Changes in operating assets and liabilities: Derivative financial instruments Notes and accounts receivable, net Receivables from related parties Other receivables from related parties Inventories (32,189) (14,131,066) (204,278) 50,589 122,472 18,578 (312,251) (22,311) (11,947,191) (168,047) (63,258) (12,989,916) 53,182 Other financial assets Other current assets 648,051 Accounts payable Payables to related parties Salary and bonus payable Accrued profit sharing to employees and bonus to directors and supervisors Accrued expenses and other current liabilities Provisions 3,656,358 346,401 850,094 (605,182) 883,925 1,386,797 1,552,210 2,105,298 Accrued pension cost Cash generated from operations Income taxes paid 3,531,017 1,595,810 9,554 361,846,606 (14,463,069) 2,051,785 977,901 (5,769) 296,275,199 (11,312,039) Net cash generated by operating activities 347,383,537 284,963,160 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of: Available-for-sale financial assets Held-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 cost Property, plant and equipment Intangible assets Proceeds from disposal or redemption of: Available-for-sale financial assets 2,418,578 964,367 Held-to-maturity financial assets 5,145,850 2,711,440 Financial assets carried at cost 67,986 353,656 Property, plant and equipment Other assets 157,484 26,688 173,554 Costs from entering into hedging transactions Interest received (143,982) 1,790,725 1,719,026 Other dividends received 506,143 71,057 Dividends received from associates 2,141,881 Refundable deposits paid Refundable deposits refunded Net 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)
Transcribed Image Text:EM-BINUS-AA-FPU-78/V2RO Changes in operating assets and liabilities: Derivative financial instruments Notes and accounts receivable, net Receivables from related parties Other receivables from related parties Inventories (32,189) (14,131,066) (204,278) 50,589 122,472 18,578 (312,251) (22,311) (11,947,191) (168,047) (63,258) (12,989,916) 53,182 Other financial assets Other current assets 648,051 Accounts payable Payables to related parties Salary and bonus payable Accrued profit sharing to employees and bonus to directors and supervisors Accrued expenses and other current liabilities Provisions 3,656,358 346,401 850,094 (605,182) 883,925 1,386,797 1,552,210 2,105,298 Accrued pension cost Cash generated from operations Income taxes paid 3,531,017 1,595,810 9,554 361,846,606 (14,463,069) 2,051,785 977,901 (5,769) 296,275,199 (11,312,039) Net cash generated by operating activities 347,383,537 284,963,160 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of: Available-for-sale financial assets Held-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 cost Property, plant and equipment Intangible assets Proceeds from disposal or redemption of: Available-for-sale financial assets 2,418,578 964,367 Held-to-maturity financial assets 5,145,850 2,711,440 Financial assets carried at cost 67,986 353,656 Property, plant and equipment Other assets 157,484 26,688 173,554 Costs from entering into hedging transactions Interest received (143,982) 1,790,725 1,719,026 Other dividends received 506,143 71,057 Dividends received from associates 2,141,881 Refundable deposits paid Refundable deposits refunded Net 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)
2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax $ 215,487,122 181,676,456 Adjustments for: Depreciation expense Amortization expense Stock option compensation cost of subsidiary Finance costs 153,979,847 2,202,022 5,312 2,646,776 (3,972,031) (1,835,980) (48,848) 129,168,514 2,180,775 6,219 1,020,422 (2,073,729) (1,645,036) (103) 444,505 4,231,602 (399,598) (141,491) (4,977) Share of profits of associates and joint venture Interest income Gain on disposal of property, plant and equipment and intangible assets, net Impairment loss on property, plant and equipment Impairment loss of financial assets Gain on disposal of available-for-sale financial assets, net Gain on disposal of financial assets carried at cost, net Loss (gain) on disposal of investments in associates Gain on deconsolidation of subsidiary Unrealized gross profit on sales to associates Loss (gain) on foreign exchange, net Dividend income 352,214 (1,267,086) (44,721) 733 (293,578) 20,870 317,547 (506,143) (9,977) 25,029 (3,219,144) (71,057) (886) Income from receipt of equity securities in settlement of trade receivables Loss on hedging instruments Gain on arising from changes in fair value of available-for-sale financial assets in hedge effective portion 5,602,779 (5,071,118)
Transcribed Image Text:2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax $ 215,487,122 181,676,456 Adjustments for: Depreciation expense Amortization expense Stock option compensation cost of subsidiary Finance costs 153,979,847 2,202,022 5,312 2,646,776 (3,972,031) (1,835,980) (48,848) 129,168,514 2,180,775 6,219 1,020,422 (2,073,729) (1,645,036) (103) 444,505 4,231,602 (399,598) (141,491) (4,977) Share of profits of associates and joint venture Interest income Gain on disposal of property, plant and equipment and intangible assets, net Impairment loss on property, plant and equipment Impairment loss of financial assets Gain on disposal of available-for-sale financial assets, net Gain on disposal of financial assets carried at cost, net Loss (gain) on disposal of investments in associates Gain on deconsolidation of subsidiary Unrealized gross profit on sales to associates Loss (gain) on foreign exchange, net Dividend income 352,214 (1,267,086) (44,721) 733 (293,578) 20,870 317,547 (506,143) (9,977) 25,029 (3,219,144) (71,057) (886) Income from receipt of equity securities in settlement of trade receivables Loss on hedging instruments Gain on arising from changes in fair value of available-for-sale financial assets in hedge effective portion 5,602,779 (5,071,118)
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