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8/13/2019 Cash Flow-s
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CORPORATE
FINANCIALREPORTING
23 The Cash Flow
Statement
Dilutive Securities and EPS
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THE CASH FLOW STATEMENT
(FAS 95 or ASC 230)
Operating activities xxxx
Investing activities xxxx
Financing activities xxxx
Increase/decrease in cash xxxx
Cash, beginning of year xxx
Cash, end of the year xxxx
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THE CASH FLOW STATEMENTOperating activities
whats not investing or financing
Investing activitiesacquiring/disposing of non-current assets (including
buying/selling Securities Available For Sale) &
lending and being repaid the principal amount loaned
Financing activitiesborrowing and repaying the principal amount borrowed &
all cash transactions with shareholders
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THE CASH FLOW STATEMENTSuppose you saw the following under ASSETS
on a companys balance sheet: (in $ 000)2012 2011
Land 10,000 4,000
and under LIABILITIES there were noliabilities for a land purchase.
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THE CASH FLOW STATEMENTSuppose you saw the following under ASSETS
on a companys balance sheet: (in $ 000)
2012 2011Land 10,000 4,000
and under LIABILITIES there was:
2012 2011
Mortgage payable for land 5,000 -0-
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THE CASH FLOW STATEMENT
Suppose you saw the following under ASSETSon a companys balance sheet: (in $ 000)
2012 2011Land 10,000 24,000
And on the 2012 financial statements therewas no mention of a land impairment loss.
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THE CASH FLOW STATEMENTSuppose you saw the following under ASSETS
on a companys balance sheet: (in $ 000)
2012 2011Land 10,000 24,000Nothing about a receivable from sale of land.
And on the 2012 income statement you sawGain on land sale 5,000
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THE CASH FLOW STATEMENTSuppose you saw the following under ASSETS
on a companys balance sheet: (in $ 000)
2012 2011Land 10,000 24,000
Mortgage receivable-land 8,000 0
And on the 2012 income statement you sawGain on land sale 5,000
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THE CASH FLOW STATEMENTSuppose you saw the following under ASSETS
on a companys balance sheet: (in $ 000)
2012 2011Land 10,000 24,000
And on the 2012 income statement you sawLand impairment loss 14,000
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THE CASH FLOW STATEMENT
Suppose you saw the following under OWNERSEQUITY on a companys balance sheet: (in $ 000)
2012 2011Capital stock 10,000 7,000
Additional paid in capital 14,000 9,000
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THE CASH FLOW STATEMENT
For the most part, that is theapproach companies take toprepare the
Investing Activitiesand the
Financial Activities parts oftheir cash flow statements -they compare balances on thebalance sheet.
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THE CASH FLOW STATEMENT
But for Operating Activities,which is based, in part, on the
income statement, companieshave a choice:
the direct methodor
the indirect method,both give you the same answer,using different approaches.