Comprehension questions Explain the differences between the presentation of cash flows from operating activities under the direct method and their presentation under the indirect method. Do you consider one method to be more useful than the other? Why? The statement of cash flows is said to be of assistance in evaluating the financial strength of an entity, yet the statement can exclude significant non-cash transactions that can materially affect the financial strength of an entity. How does AASB 107/IAS 7 seek to overcome this issue? Application and analysis exercises / Preparation of a statement of cash flows A summarised comparative statement of financial position of Green Ltd is presented below. 30 June 2018 30 June 2019 Cash 40 000 55 000 Trade receivables 92 000 140 000 Investments 35 000 30 000 Plant 130 000 180 000 Accumulated depreciation (45 000) (60 000) 252 000 345 000 Trade accounts payable 75 000 95 000 Deferred tax liability 3 000 Share capital 100 000 150 000 Retained earnings 77 000 90 000 Investment revaluation surplus 7 000 252 000 345 000 . Additional information An investment was sold for $15 000. There was no gain or loss accumulated in the investment revaluation reserve in respect of this investment. There were no disposals of plant. The profit for the year was $60 000, after income tax expense of $30 000. A dividend of $47 000 was paid during the year. The only item of other comprehensive income was a gain on revaluation of financial investments and its associated tax effect. Required Using the indirect method of presenting cash flows from operating activities, prepare a statement of cash flows in accordance with AASB 107/IAS 17 for the year ended 30 June . 2019