Below is the draft Statement of Cash flows and associated notes for River Ltd for the year ended 30 June 2021. $000 XX XX (1,500) (800) 1 XX Consolidated Statement of Cash Flows for year ended 30 June 2021 Note Cash flows from operating activities Cash receipts from customers Cash payments to suppliers Cash payments for other operating expenses Income tax paid Cash provided by operating activities Cash flows from investing activities Proceeds from sale of plant and equipment Cash purchases of property, plant and equipment Cash used to acquire subsidiary Cash used by investing activities Cash flows from financing activities Proceeds from share issue Dividends paid Cash used by financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at 1 July 20X1 Cash and cash equivalents at 30 June 20x2 400 (850) (946) (1,396) 2 500 (250) (250) XX 2.750 2,795 Note 1: Reconciliation of profit to cash flow for operating activities 450 350 30 20 400 Profit for the year Add (deduct) expenses (income) not from external transactions Depreciation expense Goodwill impairment loss Bad debt expense Add (deduct) expenses (income) classified as investing or financing Profit from sale of plant and equipment Add/Deduct effects of accrual accounting Add decrease in trade receivables Add increase in tax payable Less increase in inventories Less decrease in trade and other payables Cash provided by operating activities (100) 75 800 (205) (279) 391 1,141 Note 2: Subsidiary acquired During the year River Ltd acquired 60% of the issued shares of Hills Ltd. Details of the acquisition are as follows: Fair value of identifiable net assets acquired Cash and cash equivalents 900 Trade receivables 675 Property, plant and equipment 1 500 Trade and other payables (499) 2,576 Less Non-controlling interest (1,030) Fair value of identifiable net assets acquired attributable to the equity holders of River Ltd 1,546 Add Goodwill on acquisition 300 Purchase consideration 1,846 Purchase consideration paid entirely in cash Less Cash and cash equivalents acquired Cash outflow to acquire subsidiary net of cash acquired Extract from Financial Statements for 2021 financial year 1,846 (900) 946 Income Cost of Sales Inventory Accounts Receivable Accounts Payable Required: 2021 9,750 5,850 1,150 2,100 1,375 2020 8,800 5,280 945 1,500 1,155 a. Using the information provided, reconstruct the ledger accounts to calculate the amounts for i. Cash receipts from customers; and ii. Cash payments to suppliers including calculation of inventories for the Statement of Cash Flows. Include a table of all amounts marked XX. Show all calculations. (10 marks] b. AASB 101 states "The objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions." Explain how i) Reconciliation of profit to cash flow from operations and ii) Subsidiary Acquired meet this requirement. Use Information from the Notes provided to support your answer. (5 marks]
