CSR Limited is a leading supplier of building and construction materials headquartered in Sydney, Australia. The companys

Question:

CSR Limited is a leading supplier of building and construction materials headquartered in Sydney, Australia. The company’s 2011 total assets were more than A$2.2 billion, where A$ is the Australian dollar. The following items appeared in CSR’s 2011 statement of cash flows (in millions), which it reports using the direct method:

Receipts from customers ..............A$ 3,400

Payments to suppliers and employees ......... (3,142)

Dividends and distributions received ......... 7

Interest received ................. 13

Other cash paid for operating activities ........ (28)

Net cash from operating activities .......... 185

Purchase of property, plant, and equipment ....... (143)

Proceeds from sale of property, plant, and equipment ... 49

Net repayments of borrowings ............ (795)

Net cash from disposal of discontinued operations .... 1,873

Dividends paid ................. (307)

Capital return to CSR Limited shareholders ..... (661)

Other investing activities .............. (60)

Income taxes paid ............... (65)

Net cash from investing activities ......... 1,719

Proceeds from issue of shares ........... 3

Interest and other finance cost paid ........ (41)

Net cash from financing activities ........... (1,801)

Net increase in cash ............... ?

1. Prepare a statement of cash flows for CSR Limited using the direct method. Include the proper amount for the net increase in cash. One item, interest paid, is included in a different section of the statement than it would be on a U.S. statement of cash flows. Place it in the section that makes the cash flows in each section total to the amounts given.

2. What does the placement of interest paid tell you about the GAAP used by CSR Limited? That is, does it report under IFRS or U.S. GAAP? Where would the interest paid be shown in a statement of cash flows using the other GAAP (IFRS or U.S. GAAP)?

3. Explain why CSR places interest paid where it does. Also explain why interest paid might be placed in the alternative section you indicated in requirement 2.

GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...