Recasting financial statements to proposed reporting format. Refer to the financial statements of Scania in Exhibit 1.5 (balance sheet) and Exhibit 1.6 (income statement and Exhibit 1.7 (statement of cash flows).
a. Recast the balance sheet on December 31, 2006, and December 31, 2005, into a statement of financial position for Scania using the proposed reporting format of the joint FASB/IASB financial presentation project. Use Exhibit 16.2 as a guide. Incorporate the following additional information into the preparation of this financial statement.
(1) Current and noncurrent receivables, except tax assets relate to Scania’s sales of vehicles.
(2) Short-term investments serve an investing purpose, whereas short-term investments comprising cash and cash equivalents serve an operating purpose. Assume that the amounts Scania classifies as cash and cash equivalents on its balance sheet are entirely cash equivalents for purposes of this problem. Cash and bank balances also serve an operating purpose.
(3) Investments in associated companies and joint ventures serve an operating purpose.
(4) Current interest-bearing Liabilities directly finance Scania’s trade receivables and noncurrent interest-bearing liabilities provide Scania with financing for its broad corporate needs.
(5) Other current and noncurrent liabilities relate to Scania’s operating activities.
b. Recast Scania’s income statement into a statement of comprehensive income for the years ended December 31, 2006, 2005, and 2004, using the proposed reporting format of the joint FASB/IASB financial presentation project. Use Exhibit 16.4 as a guide. Incorporate the following information into the preparation of this financial statement.
(1) Scania derives interest income of SEK632, SEK679, and SEK346 for 2006, 2005, and 2004 respectively from short-term investments comprising cash and cash equivalents.
(2) Scania derives other financial income of SEK 142, SEK299, and SEK96, and other financial expenses of SEK81, SEK206, and SEK127 for 2006, 2005, and 2004 respectively from short-term investments.
(3) Interest expenses of SEK863, SEK866, and SEK638 for 2006, 2005, and 2004 respectively relate to noncurrent interest-bearing liabilities.
(4) Items of other comprehensive income include hedge reserve and accumulated exchange rate differences. The amounts for these items on December 31, 2003, were zero and (SEK 150) respectively.
c, Recast Scania’s statement of cash flows for the years ended December 31, 2006, 2005, and 2004 using the proposed reporting format of the joint FASB/IASB financial presentation project. Use Exhibit 16.3 as a guide, although u will likely require additional line items. To calculate cash received from operating revenues, list all operating revenues and then adjust the sum for changes in receivables. To calculate cash disbursed for manufacturing costs, adjust cost of goods sold for changes in inventory and trade payables. To calculate cash disbursed for operating expenses, list all operating expenses and then adjust the sum for noncash expenses and changes in provisions and other liabilities and provisions. You may wish to refer to Exhibit 15.5 for assistance in computing cash flow from operations under the direct method. Be sure to use the amounts for changes in balance sheet accounts from Scania’s statement of cash flows and not the amounts on its comparative balance sheet. Be sure that the classification of items as operating, investing, financing, taxes, and equity are consistent with the classifications in pans a and b. Incorporate the following information into the preparation of this statement.
(1) The statement of cash flows should explain changes in cash and bank balances. Short-term investments comprising cash and cash equivalents are operating
(2) The balance in cash and bank balances on December 31, 2003, was SEK1,243 million, and the balance in short-term investments comprising cash and cash equivalents on December 31, 2003, was SEK420 million.
(3) List the effect of exchange rate changes on cash and cash equivalents as the last item before summing to the net change in cash and bank balances for each year.