CA.

JAI CHAWLA
IMPORTANT QUESTIONS OF CA FINAL FR BY CA JAI
CHAWLA SIR

IND AS 7

Question 1 (Illustration 11 of ICAI Module)

Prepare Statement of Cash Flows:
Following is the balance sheet of Kuber Limited for the year ended 31 March, 20X2 (Rs. in lacs)
20X2 20X1
ASSETS
Non-current assets
Property, plant and equipment 13,000 12,500
Intangible assets 50 30
Other financial assets 145 170
Deferred Tax Asset (net) 855 750
Other non-current assets 800 770
Total non-current assets 14,850 14,220
Current assets
Financial assets
Investments 2,300 2,500
Cash and cash equivalents 220 460
Other current assets 195 85
Total current assets 2,715 3,045
Total assets 17,565 17,265
EQUITY AND LIABILITIES
Equity
Equity share capital 300 300
Other equity 12,000 8,000
Total equity 12,300 8,300
Liabilities
Non-current liabilities
Financial liabilities
Long-term borrowings 2,000 5,000
Other non-current liabilities 2,740 3,615
Total non-current liabilities 4,740 8,615
Current liabilities
Financial liabilities
Trade payables 150 90
Bank overdraft 75 60
Other current liabilities 300 200

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Total current liabilities 525 350
Total liabilities 5,265 8,965
Total equity and liabilities 17,565 17,265
Additional Information:
1) Profit after tax for the year ended March 31, 20X2 - Rs. 4,450 lacs
2) Interim dividend paid during the year - Rs. 450 lacs
3) Depreciation and amortisation charged in the statement of profit and loss during the current year are
as under
a) Property, Plant and Equipment - Rs. 500 lacs
b) Intangible Assets - Rs. 20 lacs
4) During the year ended March 31, 20X2 two machineries were sold for Rs. 70 lacs. The carrying amount
of these machineries as on March 31, 20X2 is Rs. 60 lacs.
5) Income taxes paid during the year Rs. 105 lacs
6) Other non-current / current assets and liabilities are related to operations of Kuber Ltd. and do not
contain any element of financing and investing activities.
Using the above information of Kuber Limited, construct a statement of cash flows under indirect method.
Solution:
Statement of Cash Flows
Rs. in lacs
Cash flows from Operating Activities
Net Profit after Tax 4,450
Add: Tax Paid 105
4,555
Add: Depreciation & Amortisation (500 + 20) 520
Less: Gain on Sale of Machine (70-60) (10)
Less: Increase in Deferred Tax Asset (855-750) (105)
4,960
Change in operating assets and liabilities
Add: Decrease in financial asset (170 - 145) 25
Less: Increase in other non-current asset (800 - 770) (30)
Less: Increase in other current asset (195 - 85) (110)
Less: Decrease in other non-current liabilities (3,615 – (875)
2,740)
Add: Increase in other current liabilities (300 - 200) 100
Add: Increase in trade payables (150-90) 60
4,130
Less: Income Tax (105)
Cash generated from Operating Activities 4,025
Cash flows from Investing Activities
Sale of Machinery 70
Purchase of Machinery [13,000-(12,500 – 500-60)] (1,060)
Purchase of Intangible Asset [50-(30-20)] (40)
Sale of Financial asset - Investment (2,500 – 2,300) 200

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Cash outflow from Investing Activities (830)
Cash flows from Financing Activities
Dividend Paid (450)
Long term borrowings paid (5,000 – 2,000) (3,000)
Cash outflow from Financing Activities (3,450)
Net Cash outflow from all the activities (255)
Opening cash and cash equivalents (460 – 60) 400
Closing cash and cash equivalents (220 – 75) 145

Question 2 (Illustration 12 of ICAI Module)

Prepare Statement of Cash Flows:
The relevant extracts of consolidated financial statements of A Ltd. are provided below:
Consolidated Statement of Cash Flows
For the year ended (Rs. in Lac)
31st March 31st March
20X2 20X1
Assets
Non-Current Assets
Property, Plant and Equipment 4,750 4,650
Investment in Associate 800 -
Financial Assets 2,150 1,800
Current Assets
Inventories 1,550 1,900
Trade Receivables 1,250 1,800
Cash and Cash Equivalents 4,650 3,550
Liabilities
Current Liabilities
Trade Payables 1,550 3,610
Extracts from Consolidated Statement of Profit and Loss for the year ended 31st March 20X2
Particulars Amount (Rs. in Lac)
Revenue 12,380
Cost of Goods Sold (9,860)
Gross Profit 2,520
Other Income 300
Operating Expenses (450)
Other expenses (540)
Interest expenses (110)
Share of Profit of Associate 120
Profit before Tax 1,840
The below information is relevant for A Ltd Group.
1) A Ltd had spent Rs. 30 Lac on renovation of a building. A Ltd charged the entire renovation cost to
profit and loss account.

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2) On 1st April 20X1, A Ltd acquired 100% shares in S Ltd, for cash of Rs. 300 Lac. Fair value of the
assets acquired and liabilities assumed under the acquisition are as under:
Property, Plant and Equipment 140 Lac
Inventories 60 Lac
Trade Receivables 30 Lac
Cash and Cash Equivalents 20 Lac
Total Assets 250 Lac
Less: Trade Payables (50 Lac)
Net Assets on acquisition 200 Lac
3) A Ltd. ‘s property, plant and equipment comprise the following:
Carrying amount on 1st April 20X1 4,650 Lac
Addition (at cost) including assets in S Ltd. 800 Lac
Revaluation Surplus 80 Lac
Disposal (Sale) of Assets (490 Lac)
Depreciation for the year (290 Lac)
st
Carrying Amount on 31 March 20X2 4,750 Lac
A Ltd constructed a machine that is a qualifying asset and incurred construction costs of Rs. 40 Lac
that has been charged to other expenses. Of the interest cost of Rs. 110 Lac
charged to profit or loss statement, Rs. 10 Lac includes interest cost on specific borrowings that need
to be capitalized. Property, plant and equipment was sold at 630 Lac. Gain on disposal is adjusted
against operating expenses.
4) A Ltd. purchased 30% interest in an Associate (G Ltd) for cash on 1st April 20X1. The associate
reported profit after tax of Rs. 400 Lac and paid a dividend of Rs. 100 Lac for the year.
5) Impairment test was conducted on 31st March 20X2. The following were impaired as under:
Goodwill impairment loss: Rs. 265 Lac
Intangible Assets impairment loss Rs. 900 Lac
The goodwill impairment relates to 100% subsidiaries.
Assume that interest cost is all paid in cash.
You are required to determine cash generated from operations for group reporting purposes for the year
ended 31st March 20X2.
Solution
Extracts of Statement of Cash Flows for the year ended 31st March 20X2
Cash Flows from Operating Activities Amount in Rs. Lacs
Profit before tax (W.N.1) 1,920
Less: Profit on Sale of PPE (630 - 490) (140)
Add back: Depreciation 290
Impairment of Goodwill 265
Impairment of Intangible Assets 900
Less: Share of Profits of Associate (400 x 30%) (120)
Add: Interest expense [110 – 10] 100
Working Capital Changes (W.N.2):
Add: Decrease in Trade Receivables 580
Add: Decrease in Inventories 410

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Less: Decrease in Trade Payables (2,110)
Cash generated from operations 2,095
Working Notes:
1) Profit before tax Amount in Rs. Lacs
Reported profit as per Profit or Loss Statement 1,840
Add back: Renovation costs charged as expense 30
Construction costs charged as expense 40
Borrowing costs to be capitalized 10
Revised Profit before tax 1,920
2) Changes in Trade Receivables Amount in Rs. Lacs
Opening Balance 1,800
Add: Receivables of S Ltd. 30
1,830
Less: Closing Balance (1,250)
580
3) Changes in Inventories Amount in Rs. Lacs
Opening Balance 1,900
Add: Receivables of S Ltd. 60
1,960
Less: Closing Balance (1,550)
410
4) Changes in Trade Payables Amount in Rs. Lacs
Opening Balance 3,610
Add: Receivables of S Ltd. 50
3,660
Less: Closing Balance (1,550)
2,110

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