FA – L1 – Q99 – Statement of Cash Flows

Prepare a statement of cash flows for Nordex Limited for 20X9 using financial statements and non-current asset details.

Question

The following information has been extracted from the draft financial information of Nordex Limited.

Statement of Profit or Loss for the Year Ended 31 December 20X9

GH¢’000	GH¢’000
Sales revenue	1,350
Administration costs	(346)
Distribution costs	(246)
Operating profit	758
Interest expense	(110)
Profit before tax	648
Taxation	(208)
Profit after tax	440
Dividends paid	(120)
Retained profit for the year	320

Statements of Financial Position

	31 December 20X9		31 December 20X8
	GH¢’000	GH¢’000	GH¢’000	GH¢’000
Non-current assets		1,145		957
Current assets
Inventory	157		142
Receivables	203		184
Cash and cash equivalents	41		10
	401	401	336	336
Total assets		1,546		1,293
Equity and liabilities
Equity
Share capital	200		200
Revaluation surplus	170		100
Retained earnings	604		404
	974	974	704	704
Non-current liabilities
Loans		350		450
Current liabilities
Trade payables	43		43
Taxation	29		36
Accruals	150		100
	222	222	179	179
Total equity and liabilities		1,546		1,293

Note on Non-Current Assets

	Land and Buildings	Machinery	Fixtures & Fittings	Total
	GH¢’000	GH¢’000	GH¢’000	GH¢’000
Cost or Valuation
At 31 December 20X8	830	470	197	1,497
Additions	–	43	55	98
Disposals	–	(18)	–	(18)
Adjustment on revaluation	70	–	–	70
At 31 December 20X9	900	495	252	1,647
Depreciation
At 31 December 20X8	(90)	(270)	(180)	(540)
Charge for the year	(10)	(56)	(8)	(74)
Disposals	–	12	–	12
Adjustment on revaluation	100	–	–	100
At 31 December 20X9	0	(314)	(188)	(502)
Carrying Amount
At 31 December 20X8	740	200	17	957
At 31 December 20X9	900	181	64	1,145

You have been informed that included within distribution costs is GH¢4,000 relating to the loss on a disposal of a non-current asset.

Required
Prepare a statement of cash flows for Nordex Limited for the year ended 31 December 20X9.

Answer

Nordex Limited
Statement of Cash Flows for the Year Ended 31 December 20X9

	GH¢’000	GH¢’000
Cash Flows from Operating Activities
Operating profit	758
Adjustments for:
Depreciation	74
Loss on disposal of non-current asset	4
	836
Increase in inventory (157 – 142)	(15)
Increase in receivables (203 – 184)	(19)
Increase in trade payables (43 – 43)	0
Increase in accruals (150 – 100)	50
Cash generated from operations	852
Interest paid (W1)	(110)
Taxation paid (W2)	(215)
Net cash from operating activities		527
Cash Flows from Investing Activities
Purchase of non-current assets	(98)
Proceeds from disposal of non-current asset (W3)	11
Net cash used in investing activities		(87)
Cash Flows from Financing Activities
Repayment of loans (450 – 350)	(100)
Dividends paid	(120)
Net cash used in financing activities		(220)
Net increase in cash and cash equivalents		220
Cash and cash equivalents at 1 January 20X9		10
Cash and cash equivalents at 31 December 20X9		41

Workings

W1: Interest Paid
Interest expense per statement of profit or loss: GH¢110,000
No opening or closing accruals for interest, so entire amount is paid: GH¢110,000

W2: Taxation Paid

	GH¢’000
Taxation liability at 1 January 20X9	36
Taxation charge for the year	208
	244
Taxation liability at 31 December 20X9	(29)
Taxation paid	215

W3: Proceeds from Disposal of Non-Current Asset

	GH¢’000
Carrying amount of asset disposed	31
Loss on disposal	(4)
Proceeds from disposal	27
Accumulated depreciation on disposal	(12)
Cost of asset disposed	18

W4: Purchase of Non-Current Assets
Additions per non-current assets note: GH¢98,000

Tags: Cash Flows, Depreciation, Dividends, Financial Statements, Financing Activities, Investing Activities, Non-current Assets, Operating Activities, Statement of Cash Flows, Taxation
Level: Level 1

Topic: IAS 7: Statement of cash flows

Uploader: Samuel Duah