International Accounting Standard 7 Statement of Cash Flows

1、International Accounting Standard 7 Statement of Cash FlowsIAS 7International Accounting Standard 7Statement of Cash FlowsThis version includes amendments resulting from IFRSs issued up to 17 January 2008.IAS 7 Cash Flow Statements was issued by the International Accounting Standards Committeein Dec

2、ember 1992. It replaced IAS 7 Statement of Changes in Financial Position (issued inOctober 1977).In April 2001 the International Accounting Standards Board resolved that all Standardsand Interpretations issued under previous Constitutions continued to be applicable unlessand until they were amended

3、or withdrawn.Since then, IAS 7 and its accompanying documents have been amended by the followingIFRSs:?IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (issued December 2003)?IAS 21 The Effects of Changes in Foreign Exchange Rates (as revised in December 2003)?IFRS 8 Operating S

4、egments (issued November 2006)?IAS 23 Borrowing Costs (as revised in March 2007)?IAS 1 Presentation of Financial Statements (as revised in September 2007)?IAS 27 Consolidated and Separate Financial Statements (as amended in January 2008).As a result of the changes in terminology made by IAS 1 in 200

5、7, the title of IAS 7 waschanged to Statement of Cash Flows.? IASCF981IAS 7CONTENTSparagraphsINTERNATIONAL ACCOUNTING STANDARD 7STATEMENT OF CASH FLOWSOBJECTIVESCOPE13BENEFITS OF CASH FLOW INFORMATION45DEFINITIONS69Cash and cash equivalents79PRESENTATION OF A STATEMENT OF CASH FLOWS1017Operating act

6、ivities1315Investing activities16Financing activities17REPORTING CASH FLOWS FROM OPERATING ACTIVITIES1820REPORTING CASH FLOWS FROM INVESTING AND FINANCING ACTIVITIES21REPORTING CASH FLOWS ON A NET BASIS2224FOREIGN CURRENCY CASH FLOWS2528INTEREST AND DIVIDENDS3134TAXES ON INCOME3536INVESTMENTS IN SUB

7、SIDIARIES, ASSOCIATES AND JOINT VENTURES3738CHANGES IN OWNERSHIP INTERESTS IN SUBSIDIARIES AND OTHER BUSINESSES3942BNON-CASH TRANSACTIONS4344COMPONENTS OF CASH AND CASH EQUIVALENTS4547OTHER DISCLOSURES4852EFFECTIVE DATE5354APPENDICESA Statement of cash flows for an entity other than a financial inst

8、itutionB Statement of cash flows for a financial institution?982 IASCFIAS 7International Accounting Standard 7 Statement of Cash Flows (IAS 7) is set out inparagraphs 154. All the paragraphs have equal authority but retain the IASC formatof the Standard when it was adopted by the IASB. IAS 7 should

9、be read in the contextof its objective, the Preface to International Financial Reporting Standards and the Frameworkfor the Preparation and Presentation of Financial Statements. IAS 8 Accounting Policies, Changes inAccounting Estimates and Errors provides a basis for selecting and applying accountin

10、gpolicies in the absence of explicit guidance. ? IASCF983IAS 7International Accounting Standard 7*Statement of Cash FlowsObjectiveInformation about the cash flows of an entity is useful in providing users offinancial statements with a basis to assess the ability of the entity to generate cashand cas

11、h equivalents and the needs of the entity to utilise those cash flows.Theeconomic decisions that are taken by users require an evaluation of theability of an entity to generate cash and cash equivalents and the timing andcertainty of their generation.The objective of this Standard is to require the

12、provision of information about thehistorical changes in cash and cash equivalents of an entity by means of astatement of cash flows which classifies cash flows during the period fromoperating, investing and financing activities.Scope1An entity shall prepare a statement of cash flows in accordance wi

13、th therequirements of this Standard and shall present it as an integral part of itsfinancial statements for each period for which financial statements arepresented.2This Standard supersedes IAS 7 Statement of Changes in Financial Position, approved inJuly 1977.3Users of an entitys financial statemen

14、ts are interested in how the entitygenerates and uses cash and cash equivalents. This is the case regardless of thenature of the entitys activities and irrespective of whether cash can be viewed asthe product of the entity, as may be the case with a financial institution. Entitiesneed cash for essen

15、tially the same reasons however different their principalrevenue-producing activities might be. They need cash to conduct theiroperations, to pay their obligations, and to provide returns to their investors.Accordingly, this Standard requires all entities to present a statement of cashflows.Benefits

16、 of cash flow information4A statement of cash flows, when used in conjunction with the rest of the financialstatements, provides information that enables users to evaluate the changes innet assets of an entity, its financial structure (including its liquidity and solvency)and its ability to affect t

17、he amounts and timing of cash flows in order to adapt tochanging circumstances and opportunities. Cash flow information is useful inassessing the ability of the entity to generate cash and cash equivalents andenables users to develop models to assess and compare the present value of the*In September

18、 2007 the IASB amended the title of IAS 7 from Cash Flow Statements to Statement ofCash Flows as a consequence of the revision of IAS 1 Presentation of Financial Statements in 2007.?984 IASCFIAS 7future cash flows of different entities. It also enhances the comparability of thereporting of operating

19、 performance by different entities because it eliminates theeffects of using different accounting treatments for the same transactions andevents.5Historical cash flow information is often used as an indicator of the amount,timing and certainty of future cash flows. It is also useful in checking thea

20、ccuracy of past assessments of future cash flows and in examining therelationship between profitability and net cash flow and the impact of changingprices.Definitions6The following terms are used in this Standard with the meanings specified: Cash comprises cash on hand and demand deposits.Cash equiv

21、alents are short-term, highly liquid investments that are readilyconvertible to known amounts of cash and which are subject to an insignificantrisk of changes in value.Cash flows are inflows and outflows of cash and cash equivalents.Operating activities are the principal revenue-producing activities

22、 of the entity andother activities that are not investing or financing activities.Investing activities are the acquisition and disposal of long-term assets and otherinvestments not included in cash equivalents.Financing activities are activities that result in changes in the size and compositionof t

23、he contributed equity and borrowings of the entity.Cash and cash equivalents7Cash equivalents are held for the purpose of meeting short-term cashcommitments rather than for investment or other purposes. For an investmentto qualify as a cash equivalent it must be readily convertible to a known amount

24、of cash and be subject to an insignificant risk of changes in value. Therefore, aninvestment normally qualifies as a cash equivalent only when it has a shortmaturity of, say, three months or less from the date of acquisition. Equityinvestments are excluded from cash equivalents unless they are, in s

25、ubstance,cash equivalents, for example in the case of preferred shares acquired within ashort period of their maturity and with a specified redemption date.8Bank borrowings are generally considered to be financing activities. However, insome countries, bank overdrafts which are repayable on demand f

26、orm an integralpart of an entitys cash management. In these circumstances, bank overdrafts areincluded as a component of cash and cash equivalents. A characteristic of suchbanking arrangements is that the bank balance often fluctuates from beingpositive to overdrawn.9Cash flows exclude movements bet

27、ween items that constitute cash or cashequivalents because these components are part of the cash management of anentity rather than part of its operating, investing and financing activities.Cashmanagement includes the investment of excess cash in cash equivalents.? IASCF985IAS 7Presentation of a sta

28、tement of cash flows10The statement of cash flows shall report cash flows during the period classified byoperating, investing and financing activities.11An entity presents its cash flows from operating, investing and financingactivities in a manner which is most appropriate to its business. Classifi

29、cation byactivity provides information that allows users to assess the impact of thoseactivities on the financial position of the entity and the amount of its cash andcash equivalents. This information may also be used to evaluate the relationshipsamong those activities.12A single transaction may in

30、clude cash flows that are classified differently.Forexample, when the cash repayment of a loan includes both interest andcapital, the interest element may be classified as an operating activity and thecapital element is classified as a financing activity.Operating activities13The amount of cash flow

31、s arising from operating activities is a key indicator of theextent to which the operations of the entity have generated sufficient cash flowsto repay loans, maintain the operating capability of the entity, pay dividends andmake new investments without recourse to external sources of financing.Infor

32、mation about the specific components of historical operating cash flows isuseful, in conjunction with other information, in forecasting future operatingcash flows.14Cash flows from operating activities are primarily derived from the principalrevenue-producing activities of the entity. Therefore, the

33、y generally result fromthe transactions and other events that enter into the determination of profit orloss. Examples of cash flows from operating activities are: (a)cash receipts from the sale of goods and the rendering of services;(8b)cash receipts from royalties, fees, commissions and other reven

34、ue;(c)cash payments to suppliers for goods and services;(d)cash payments to and on behalf of employees;(e)cash receipts and cash payments of an insurance entity for premiums andclaims, annuities and other policy benefits;(f)cash payments or refunds of income taxes unless they can be specificallyiden

35、tified with financing and investing activities; and(g)cash receipts and payments from contracts held for dealing or tradingpurposes.Some transactions, such as the sale of an item of plant, may give rise to a gain orloss which is included in the determination of profit or loss. However, the cashflows

36、 relating to such transactions are cash flows from investing activities.?9986 IASCFIAS 715An entity may hold securities and loans for dealing or trading purposes, in whichcase they are similar to inventory acquired specifically for resale. Therefore, cashflows arising from the purchase and sale of d

37、ealing or trading securities areclassified as operating activities. Similarly, cash advances and loans made byfinancial institutions are usually classified as operating activities since they relateto the main revenue-producing activity of that entity.Investing activities16The separate disclosure of

38、cash flows arising from investing activities is importantbecause the cash flows represent the extent to which expenditures have beenmade for resources intended to generate future income and cash flows. Examplesof cash flows arising from investing activities are: (a)cash payments to acquire property,

39、 plant and equipment, intangibles andother long-term assets. These payments include those relating tocapitalised development costs and self-constructed property, plant andequipment; (b)cash receipts from sales of property, plant and equipment, intangibles andother long-term assets;(c)cash payments t

40、o acquire equity or debt instruments of other entities andinterests in joint ventures (other than payments for those instrumentsconsidered to be cash equivalents or those held for dealing or tradingpurposes);(d)cash receipts from sales of equity or debt instruments of other entities andinterests in

41、joint ventures (other than receipts for those instrumentsconsidered to be cash equivalents and those held for dealing or tradingpurposes);(e)cash advances and loans made to other parties (other than advances andloans made by a financial institution); (f)cash receipts from the repayment of advances a

42、nd loans made to otherparties (other than advances and loans of a financial institution);(g)cash payments for futures contracts, forward contracts, option contractsand swap contracts except when the contracts are held for dealing ortrading purposes, or the payments are classified as financing activi

43、ties; and(h)cash receipts from futures contracts, forward contracts, option contractsand swap contracts except when the contracts are held for dealing ortrading purposes, or the receipts are classified as financing activities.When a contract is accounted for as a hedge of an identifiable position th

44、e cashflows of the contract are classified in the same manner as the cash flows of theposition being hedged.? IASCF987IAS 7Financing activities17The separate disclosure of cash flows arising from financing activities isimportant because it is useful in predicting claims on future cash flows byprovid

45、ers of capital to the entity. Examples of cash flows arising from financingactivities are: (a)cash proceeds from issuing shares or other equity instruments;(b)cash payments to owners to acquire or redeem the entitys shares;(c)cash proceeds from issuing debentures, loans, notes, bonds, mortgages ando

46、ther short or long-term borrowings;(d)cash repayments of amounts borrowed; and(e)cash payments by a lessee for the reduction of the outstanding liabilityrelating to a finance lease.Reporting cash flows from operating activities18An entity shall report cash flows from operating activities using eithe

47、r: (a)the direct method, whereby major classes of gross cash receipts and grosscash payments are disclosed; or(b)the indirect method, whereby profit or loss is adjusted for the effects oftransactions of a non-cash nature, any deferrals or accruals of past or futureoperating cash receipts or payments

48、, and items of income or expenseassociated with investing or financing cash flows.19Entities are encouraged to report cash flows from operating activities using thedirect method. The direct method provides information which may be useful inestimating future cash flows and which is not available unde

49、r the indirectmethod. Under the direct method, information about major classes of gross cashreceipts and gross cash payments may be obtained either: (a)from the accounting records of the entity; or(b)by adjusting sales, cost of sales (interest and similar income and interestexpense and similar charg

50、es for a financial institution) and other items inthe statement of cash flows for:(i)changes during the period in inventories and operating receivablesand payables;(ii)other non-cash items; and(iii)other items for which the cash effects are investing or financing cashflows.20Under the indirect metho

51、d, the net cash flow from operating activities isdetermined by adjusting profit or loss for the effects of: (a)changes during the period in inventories and operating receivables andpayables;?988 IASCFIAS 7(b)non-cash items such as depreciation, provisions, deferred taxes, unrealisedforeign currency

52、gains and losses, undistributed profits of associates, andnon-controlling interests; and(c)all other items for which the cash effects are investing or financing cashflows.Alternatively, the net cash flow from operating activities may be presented underthe indirect method by showing the revenues and

53、expenses disclosed in thestatement of cash flows and the changes during the period in inventories andoperating receivables and payables.Reporting cash flows from investing and financing activities21An entity shall report separately major classes of gross cash receipts and grosscash payments arising

54、from investing and financing activities, except to theextent that cash flows described in paragraphs 22 and 24 are reported on anetbasis.Reporting cash flows on a net basis22Cash flows arising from the following operating, investing or financing activitiesmay be reported on a net basis: (a)cash rece

55、ipts and payments on behalf of customers when the cash flowsreflect the activities of the customer rather than those of the entity; and(b)cash receipts and payments for items in which the turnover is quick, theamounts are large, and the maturities are short.23Examples of cash receipts and payments r

56、eferred to in paragraph 22(a) are: (a)the acceptance and repayment of demand deposits of a bank;(b)funds held for customers by an investment entity; and(c)rents collected on behalf of, and paid over to, the owners of properties.Examples of cash receipts and payments referred to in paragraph 22(b) ar

57、eadvances made for, and the repayment of:(a)principal amounts relating to credit card customers;(b)the purchase and sale of investments; and(c)other short-term borrowings, for example, those which have a maturityperiod of three months or less.24Cash flows arising from each of the following activitie

58、s of a financial institutionmay be reported on a net basis:(a)cash receipts and payments for the acceptance and repayment of depositswith a fixed maturity date;(b)the placement of deposits with and withdrawal of deposits from otherfinancial institutions; and? IASCF989IAS 7(c)cash advances and loans

59、made to customers and the repayment of thoseadvances and loans.Foreign currency cash flows25Cash flows arising from transactions in a foreign currency shall be recorded in anentitys functional currency by applying to the foreign currency amount theexchange rate between the functional currency and the foreign currency at thedate of the cash flow.26The cash flows of a foreign subsidi