A Statement of Cash Flows forms an integral portion of a set of Financial Statements to be made by a reporting entity. The given Financial Statements of Smoothflows Ltd. has been given to you. They are in respect of Financial Years ending 31st December 2011 and 2012 correspondingly:
This additional information was given:
a) Throughout the Year 2012, Plant which had cost Rs 100,000 and which had a book value of Rs 20,000 was sold for Rs 15,000;
b) Rs 50,000 of the Debentures were repaid on 31st December 2012;
c) An Interim Dividend of Rs 7,500 was paid throughout the year 2012; and
d) Taxation in the sum of Rs 6,000 has been debited to the Profit and Loss Account.
Profit and loss account for the year ended 31st December 2012:
Required:
Question 1: Make a Statement of Cash Flows for the year ended 31st December 2012 by using the Indirect Method, and complying with IAS 7.
Question 2: Describe the main purpose of a Statement of Cash Flows.
Question 3: Describe what you understand by ‘Allocation’ and ‘Apportionment’ of Costs.