QUESTION 5 NZ IAS 7 Statement of Cash Flows states that cash flows from interest and dividends received and paid shall be disclosed separately and allows choice as to the classification of these cash flows. The junior accountant, for Pie Ltd, does not fully understand the effects of this choice of clas- sification on the statement of cash flows (SCF) and notes. You have been requested to demonstrate the practical differences by completing the two partial SCF in the Answer Book- let. Pie Ltd provided you with five general ledger accounts: 1/4/18 Opening balance Interest income Interest income receivable 3 500 Cash 15 000 31/3/19 Closing balance 18 500 13 750 4750 18 500 1/4/18 Opening balance Dividend income Dividend income receivable Cash 1 3 000 31/3/19 | Closing balance 3 000 2 500 500 3 000 Question 5 continued: Cash 31/3/19 Closing balance Interest expense payable 33 000 1/4/18 Opening balance 7 000 Interest expense 40 000 4 000 36 000 40 000 Cash 31/3/19 Closing balance Dividends payable 45 000 1/4/18 250 000 295 000 Opening balance Dividend declared 45 000 250 000 295 000 Dividend declared 31/3/19 Closing balance Retained earnings 250 000 1/4/18 716 000 966 000 Opening balance PAT 110 000 856 000 966 000 Required: Complete the two partial Statement of Cash Flows for Pie Ltd, in accordance with NZ IAS 7 Statement of Cash Flows, for the year ended 31 March 2019. In the first partial Statement of Cash Flows the direct method is used for reporting cash flows from operating activities, and in the second partial Statement of Cash Flows the indirect method is used for reporting cash flows from operating activities. QUESTION 5 Partial Statement of Cash Flows for Pie Ltd for the year ended 31 March 2019 Cash flows from operating activities - Direct method: Items classified as CFOA Alternative classification was chosen Cash generated from operations Net cash (used in) from operating activities Cash flows from investing activities Net cash (used in) from investing activities Cash flows from financing activities Net cash (used in) from financing activities Question 5 continued: Partial Statement of Cash Flows for Pie Ltd for the year ended 31 March 2019 Cash flows from operating activities - Indirect method: Items classified Alternative classifica- as CFOA tion was chosen PBT Deferrals/Accruals: Items of income/expense included in PBT to be shown separately as CFOA: Items of income/expense included in PBT to be classified as CFIA/CFFA: Cash generated from operations Net cash (used in)/from operating activities Cash flows from investing activities Net cash (used in)/from investing activities Cash flows from financing activities Net cash (used in) from financing activities