CASH FLOW STATEMENTS (IAS 7)

1. Introduction

This International Accounting Standard supersedes the Accounting Standard, “Changes in Financial
Position,” which was approved by the Board in October 1977.

2. Objectives

Information about the cash flows of an enterprise is useful in providing users of financial statements
with a basis to assess the ability of the enterprise to generate cash and cash equivalents and the needs of the
enterprise to utilize those cash flows. The economic decisions that are taken by users require an evaluation
of the ability of an enterprise to generate cash and cash equivalents and he timing and certainty of their
generation.
The objective of this Standard is to require the provision of information about the historical changes
in cash and cash equivalents of an enterprise by means of a cash flow statement which classifies cash flows
during the period from operating, investing and financing activities.

3. Scope

(a) An enterprise should prepare a cash flow statement in accordance with he requirements of this
Standard and should present it as an integral part of its financial statements for each period for
which financial statements are presented.
(b) The Standard supersedes IAS 7, Statement of Changes in Financial Position, approved in July
1977.
(c) Users of an enterprise’s financial statements are interested in how the enterprise generates and
uses cash and cash equivalents. This is the case regardless of the nature of the enterprise’s
activities and irrespective of whether cash can be viewed as the product of the enterprise, as may
be the cash with a financial institution. Enterprises need cash or essentially the same reasons
however different their principal revenue producing activities might be. They need cash to
conduct their operations, to pay their obligations, and to provide returns to their investors.
Accordingly, the Standard requires al enterprises to present a cash flow statement.

4. Benefits of Cash flow Information

A cash flow statement, when used in conjunction with the rest of the financial statements, provides
information that enables users to evaluate the changes in net assets of an enterprise, its financial structure
(including the liquidity and solvency) and its ability to affect the amounts and timing of cash flows in order
to adapt to changing circumstances and opportunities. Cash flow information is useful in assessing the
ability of the enterprise to generate cash and cash equivalents and enables users to develop models to assess
and compare the present value of the future cash flows of different enterprises. It also enhances the
comparability of the reporting of operating performance by different enterprises because it eliminates the
effects of using different accounting treatments for the same transactions and events.
Historical cash flow information is often used as an indicator of the amount, timing and certainty of
future cash flows. It is also useful in checking the accuracy o past assessments of future cash flows and in
examining the relationship between profitability and net cash flow and the impact of changing prices.

5. Definitions

The following terms are used in this Standard with the meaning specified:
(a) Cash: cash comprises cash on hand and demand deposits.
(b) Cash equivalents: Cash equivalents are short-term, highly liquid investments that are readil
convertible to known amounts of cash and which are subject ot an insignificant risk of changes n
value.
(c) Cash flows: Cash flows are inflows and outflows of cash and cash equivalents.
 (d) Operating Activities: Operating activities are the principal revenue-producing activities of the
enterprise and other activities that are not investing or financing activities.
(e) Investing Activities: Investing activities are the acquisition and disposal of long-term assets and
other investments not included in cash equivalents.
(f) Financing Activities: Financing activities are activities that result in changes in the size and
composition of the equity capital and borrowings of the enterprise.

6. Cash and Cash Equivalents

Cash equivalents are held for the purpose for meeting short-term cash commitments rather tan for
investment for other purposes. For an investment to qualify as a cash equivalent it must be readily
convertible to a known amount of cash and be subject to an insignificant risk of changes in value. Therefore,
an investment normally qualifies as a cash equivalent only when it has a short maturity of, say, three months
or less from the date of acquisition. Equity investments are excluded from cash equivalents unless they are,
in substance, cash equivalents, fro example n the case of preferred shares acquired within a short period of
their maturity and with a specified redemption date.
Bank borrowings are generally considered to be financing activities. However, in some countries,
bank overdrafts which are repayable on demand form an integral pat of an enterprise’s cash management. In
these circumstances, bank overdrafts are included as a component of cash and cash equivalents. A
characteristic of such banking arrangements is that the bank balance often fluctuates from being positive to
overdrawn.
Cash flows exclude movements between items that constitute cash or cash equivalents because these
components are part of the cash management of an enterprise rather than part of its operating, investing and
financing activities. Cash management includes the investment of excess cash in cash equivalents.

7. Presentation of a Cash Flow Statement

The cash flow statement should report cash flows during the period classified by operating,
investing and financing activities.
An enterprise presents its cash flows from operating, investing and financing activities in a mane
which is most appropriate to its business. Classification by activity provides information that allows users to
assess the impact of those activities on the financial position of the enterprise and the amount o its cash and
cash equivalents. This information may also be used to evaluate the relationships among those activities.
A single transaction may include cash lows that are classified differently. For example, when the
cash repayment of a loan includes both interest and capital, the interest element may be classified as an
operating activity and the capital element is classifies as a financing activity.

8. Operating Activities

The amount of cash flows arising from operating activities is a key indicator of the extent to which
the operations of the enterprise have generated sufficient cash flows to repay loans, maintain the operating
capability of the enterprise, pay dividends and make new investments without recourse to external sources of
financing. Information about the specific components of historical operating cash flows is useful, I
conjunction with other information, in forecasting future operating cash flows.
Cash flows from operating activities are primarily derived from the principal revenue producing
activities of the enterprise. Therefore, they generally result from the transactions and other evens that enter
into the determination of net profit or loss. Examples of cash flows from operating activities ae:
(a) Cash receipts a from the sale of goods and the rendering services;
(b) Cash receipts from royalties, fees, commissions and other revenue;
(c) Cash payments to suppliers for goods and services;
(d) Cash payments to and on behalf of employees;
(e) Cash receipts and cash payments of an insurance enterprise for premiums and claims, annuities
and other policy benefits;
(f) Cash payments or refunds of income taxes unless they can be specifically identified with
financing and investing activities; and
(g) Cash receipts and payments from contracts held for dealing or trading purposes.
Some transactions, such as the sale of an item of plant, may give rise to a gain or loss which is
included in the determination of net profit or loss. However, the cash flows relating ot such transactions re
cash flows from investing activities.
 An enterprise ay hold securities and loans for dealing or trading purposes, in which case they are
similar to inventory acquired specifically for resale. Therefore, cash flow arising from the purchase and sale
of dealing or trading securities are classified as operating activities. Similarly, cash advances and loans made
by financial institutions are usually classifies as operating activities since they relate to the main revenue
producing activity of that enterprise.

9. Investing Activities

The separate disclosure of cash flows arising from investing activities is important because the cash
flows represent the extent to which expenditures have been made from resources intended t generate future
income and cash flows. Examples of cash flows arising from investing activities are:
a) Cash payments to acquire property, plant and equipment, intangibles and other long-term assets.
These payments include those relating to capitalized development costs and self constructed
property plant and equipment;
b) Cash receipts from sales of property, plant and equipment, intangibles and other long-term
assets;
c) Cash payments to acquire equity or debt instruments of other enterprises and interests in joint
ventures (other than payments for those instruments considered to be cash equivalents or those
held for dealing or trading purposes);
d) Cash receipts from sales of equity or debt instruments of other enterprises and interests in joint
ventures (other than receipts for those instruments considered to be cash equivalents and those
held for dealing or trading purposes);
e) Cash advances and loans made to other parties (other than advances and loans made by a
financial institution);
f) Cash receipts from the repayment of advances and loans made to other parties (other than
advances and loans of a financial institutions);
g) Cash payments for futures contracts, forward contracts, option contracts and swap contracts
except when the contracts are held for dealing or trading purposes, or the payments are
classified as financing activities; and
h) Cash receipts from futures contracts, forward contracts, option contracts and swap contracts
except when the contracts are held for dealing or trading purposes or the receipts are classified
as financing activities.
When a contract is accounted for as a hedge of an identifiable position, the cash flows of the
contract are classified in the same manner as the cash flows of the position being hedged.

10. Financing Activities

The separate disclosure of cash flows arising from financing activities is important because it is
useful in predicting claims on future cash flows by providers of capital to the enterprise. Examples of cash
flows arising from financing activities are:
(a) Cash proceeds from issuing shares or other equity instruments;
(b) Cash payments to owners to acquire or redeem the enterprise’s shares;
(c) Cash proceeds from issuing debentures, loans, notes, bonds, mortgages and other short or long-
term borrowings;
(d) Cash repayments of amounts borrowed; and
(e) Cash payments by a lessee for the reduction of the outstanding liability relating to a finance
lease.

11. Reporting Cash Flows from Operating Activities

An enterprise should report cash flows from operating activities using either
(a) the direct method, whereby major classes of gross cash receipts and gross cash payments are
disclosed; or
(b) the indirect method, whereby net profit or loss is adjusted for the effects of transactions of a
noncash nature, and deferrals or accruals of past or future operating cash receipts or payments,
and items of income or expense associated with investing or financing cash flows.
Enterprises are encouraged to report cash flows from operating activities using the direct method.
The direct method provides information which may be useful in estimating future cash flows and which is
not availabl3 under the indirect method. Under the direct method, information about major classes of gross
cash receipts and gross cash payments may be obtained either:
(a) from the accounting records of the enterprise; or
(b) by adjusting sales, cost of sales interest and similar income and interest expense and similar
charges for a financial institution) and other items in the income statement for:
(i) changes during the period in inventories and operating receivables and payables;
(ii) other noncash items; and
(iii) other items for which the cash effects are investing or financing cash flows.
Under the indirect method, the net cash flow from operating activities is determined by adjusting net
profit or loss for the effects of:
(a) changes during the period in inventories and operating receivables and payables;
(b) non-cash items such as depreciation, provisions, deferred taxes, unrealized foreign currency
gains and losses, undistributed profits of associates, and minority interests; and
(c) all other items for which the cash effects are investing or financial cash flows.
Alternatively, the net cash flow from operating activities may be presented under the indirect
method by showing the revenues and expenses disclosed in the income statement and the changes during the
period in inventories and operating receivables and payables.

12. Reporting Cash Flows from Investing and Financing Activities

An enterprise should report separately major classes of gross cash receipts and gross cash payments
arising from investing and financing activities, except to the extent that cash flows described in the
following paragraphs (Reporting Cash flows on a Net Basis).

13. Reporting Cash flows on a Net Basis

Cash flows arising from the following operating, investing or financing activities may be reported
on a net basis:
(a) cash receipts and payments on behalf of customers when the cash flows reflect the activities of
the customer rather than those of the enterprise; Examples of such cash receipts and payments
are;
(i) the acceptance and repayment of demand deposits of a bank;
(ii) funds held fro customers by an investment enterprise; and
(iii) rents collected on behalf of, and paid over to, the owners of properties.
and
(b) cash receipts and payments for items in which the turnover is quick, the amounts are large, and
the maturities are short. Examples of such cash receipts and payments are advances made for,
and the repayment of:
(i) principal amounts relating ot credit card customers;
(ii) the purchase and sale of investments; and
(iii) other short-term borrowings, for example, those which have a maturity period of three
months or less.
Cash flows arising from each o the following activities of a financial institution may be reported on
a net basis:
(a) cash receipts and payments for the acceptance and repayment of deposits with a fixed maturity
date;
(b) the placement of de3posits with and withdrawal of deposits from other financial institutions; ad
(c) cash advances and loans made to customers and the repayment of those advances and loans.

14. Foreign Currency Cash Flows

Cash flows arising from transactions in a foreign currency should be recorded in an enterprise’s
reporting currency by applying to the foreign currency amount the exchange rate between the reporting
currency and the foreign currency at the date of the cash flow.
The cash flows of a foreign subsidiary should b translated at the exchange rates between the
reporting currency and the foreign currency at the dates of the cash flows.
Cash flows denominated in a foreign currency are reported in a manner consistent with IAS 21:
Accounting for the effects of Changes in Foreign Exchange Rates. This permits the use of an exchange rate
that approximates the actual rate. For example, a weighted average exchange rate for a period may be used
for recording foreign currency transactions or the transaction of the cash flows of a foreign subsidiary.
However, IAS 21 does not permit use of the exchange rate at the Statement of Financial Position date when
translating the cash flows of a foreign subsidiary.
Unrealized gains and losses arising from changes in foreign currency exchange rates are not cash
flows. However, the effect o exchange rate changes on cash and cash equivalents held or due in a foreign
currency is reported in the cash flow statement in order t reconcile cash and cash equivalents at the
beginning and the end of the period. This amount is presented separately from cs flows from operating,
investing and financing activities and includes the differences, if any, ad those cash flows been reported at
the end of period exchange rates.

15. Extraordinary Items

The cash flows associated with extraordinary items should be classified as arising from operating,
investing or financing activities as appropriate and separately disclosed.
The cash flows associated with extraordinary items are disclosed separately as arising from
operating, investing or financing activities in the cash flow statement, to enable users to understand their
nature and effect on the present and future cash flows of the enterprise. These disclosures are in addition to
the separate disclosures of the nature and amount of extraordinary items required by IAS 8, Net Profit or
Loss for the Period, Fundamental Errors and Changes n Accounting Policies.

16. Interest and Dividends

Cash flows from interest and dividends are received and paid should each be disclosed separately.
Each should be classified in a consistent manner from period to period either as operating, investing or
financing activities.
The total amount of interest paid during a period is disclosed in the cash flow statement whether it
has been recognized as a expense in the Income Statement or Capitalized in accordance with the allowed
alternative treatment in IAS 23, Borrowing Costs.
Interest paid and interest and dividends received are usually classified as operating cash flows for a
financial institution. However, there is no consensus on the classification of these cash flows for other
enterprises. Interest paid and interest and dividends received may be classified as operating cash flows
because they enter into the determination of net profit or loss. Alternatively, interest paid and interest and
dividends received may be classified as financing cash flows and investing cash flows respectively, because
they are costs of obtaining financial resources or return on investments.
Dividends paid may be classified as a financing cash flow because they are a costof obtaining
financial resources. Alternatively, dividends paid may be classified as a component of cash flows from
operating activities in order to assist users to determine the ability o an enterprise to pay dividends out of
operating cash flows.

17. Taxes on Income

Cash flows arising from taxes on income should be separately disclosed and should be classified as
cash flows from operating activities unless they can be specifically identified with financing and investing
activities.
Taxes on income arise on transactions that give rise to cash flows that are classified as operating,
investing or financing activities in cash flow statement. While tax expense may be readily identifiable with
investing or financing activities, the related tax cash flows are often impracticable to identify and may arise
in a different period from the cash flows of the underling transaction. Therefore, taxes paid are usually
classifies as cash flows from operating activities. However, when it is practicable to identify the tax cash
flow with an individual transaction, that gives rise to cash flows that is classified as an investing or financing
activity as appropriate. When tax cash flows are allocated over more than one class of activity, the total
amount of taxes paid is disclosed.

18. Investments in Subsidiaries, Associates and Joint Ventures

When accounting for an investment in an associate or a subsidiary accounted for by use of the equity
or cost method, an investor restricts its reporting in the cash flow statement to the cash flows between itself
and the investee, for example, to dividends and advances.
 An enterprise, which reports its interest in a jointly controlled entity using proportionate
consolidation, includes in its consolidated cash flow statement its proportionate share of the jointly
controlled entity’s cash flows. An enterprise which reports such an interest using the equity method includes
in its cash flow statement the cash flows in respect of its investments in the jointly controlled entity, and
distributions and other payments or receipts between it and the jointly controlled entity.

19. Acquisitions and Disposals of Subsidiaries and Other Business Units

The aggregate cash flows arising from acquisitions and from disposals of subsidiaries or other
business units should be presented separately and classified as investing activities.
An enterprise should disclose, in aggregate, in respect of bank acquisitions and disposals of
subsidiaries or other business units during the period each of the following:
(a) the total purchase or disposal consideration;
(b) the portion of the purchase or disposal consideration discharged by means of cash and cash
equivalents;
(c) the amount of cash and cash equivalents in the subsidiary or business unit acquired or disposed
of; and
(d) the amount of the assets and liabilities other than cash or cash equivalents in the subsidiary or
business unit acquired or disposed or, summarized by each major category.
The separate presentation of the cash flow effects of acquisitions and disposals of subsidiary and
other business units as single line items, together with the separate disclosure of the amounts of assets and
liabilities acquired or disposed o, helps to distinguish hose cash flows from the cash flows arising from the
other operating, investing and financing activities. The cash flow effects of disposals are not deducted from
those of acquisitions.
The aggregate amount of the cash paid or received as purchase or sale consideration is reported in
the cash flow statement net of cash and cash equivalents acquired or disposed of.

20. Non-cash Transactions

Investing and financing transactions that do not require the use of cash or cash equivalents should be
excluded from a cash flow statement. Such transactions should be disclosed elsewhere in the financial
statements in a way that provides all the relevant information about these investing and financing activities.
Many investing and financing activities do not have a direct impact on current cash flows although
they do affect the capital and asset structure of an enterprise. The exclusion of non-cash transactions from
the cash flow statement is consistent with the objective of a cash flow statement as these items do not
involve cash flows in the current period. Examples of non-cash transactions are:
(a) the acquisition of assets either by assuming directly related liabilities or by means of a finance
lease;
(b) the acquisition of an enterprise by means of an equity issue, and
(c) the conversion of debt to equity.

21. Components of Cash and Cash Equivalents

An enterprise should disclose the components of cash and cash equivalents and should represent a
reconciliation of the amounts in its cash flow statement with the equivalent items reported in the Statement
of Financial Position.
In view of the variety of cash management practices and banking arrangements around the world
and in order to comply with IAS 1, Presentation of Financial Statements, an enterprise discloses the policy
which it adopts in determining the composition of cash and cash equivalents.
The effect of any change in the policy for determining components of cash and cash equivalents, for
example, a change in the classification of financial instruments previously considered to be part of an
enterprise’s portfolio, is reported in accordance with IAS 8, Net Profit or Loss for the Period, Fundamental
errors and Changes in Accounting Policies.

22. Other Disclosures

An enterprise should disclose, together with a commentary by management, the amount of

significant cash and cash equivalent balances held by the enterprise that are not available for use by the
group.
 There are various circumstances in which cash and cash equivalent balances held by the enterprise
are not available for use by the group. Examples include cash and cash equivalent balances held b a
subsidiary that operates in a country where exchange controls or other legal restrictions apply when the
balances are not available for general use by the parent or other subsidiaries.
Additional information may be relevant to users in understanding the financial position and liquidity
of an enterprise. Disclosure of this information, together with a commentary by management, is encouraged
and may include:
(a) the amount of undrawn borrowing facilities that may be available for future operating activities
and to settle capital commitments, indicating any restrictions on the use of these facilities
(b) the aggregate amounts of the cash flows from each of operating, investing, financing activities
related to interests in joint ventures reported using proportionate consolidation;
(c) the aggregate amount of cash flows that represent increases in operating capacity separately
from those cash flows that are required to maintain operating capacity; and
(d) the amount of the cash flows arising from the operating, investing and financing activities of
each reported industry and geographical segment.
The separate disclosure of cash flows that represent increases in operating capacity and cash flows
that are required to maintain operating capacity is useful in enabling the user to determine whether the
enterprise is investing adequately in the maintenance of its operating capacity. An enterprise that does not
invest adequately in the maintenance of its operating capacity may be prejudicing future profitability for the
sake of current liquidity and distributions to owners.
The disclosures of segmental cash flows enables users to obtain a better understanding of the
relationship between the cash flows of the business as a whole and those of its component parts and the
availability and variability of segmental cash flows.

23. Effective Date

This International Accounting Standard becomes operative for financial statements covering periods
beginning on or after 1 January, 1994.
Problem # 2

The following comparative Statement of Financial Positions and other data are for Sharar
Telephone Sales Co. Ltd.

Sharar Telephone Co. Ltd.

Statement of Financial Position
As on 31.12.2012 & 31.12.2013
Assets 2013 2012
Taka Taka
Non-Current Assets:
Land 360,000 285,000
Equipment 540,000 600,000
Current Assets:
Closing Inventory 60,000 70,000
Consumables 3,500 5,100
Account Receivable 52,150 48,500
Prepaid insurance premium 2,800 2,400
Cash 152,210 102,000
Total Assets 1,170,660 1,113,000
Capital & Liabilities
Equity Share Capital of Tk. 10 each 370,000 330,000
Share Premium 65,000 -
Retained Earnings 183,000 174,900
Accumulated Depreciation- Equipment 150,000 135,000
Long-term Loan 300,000 300,000
Current Liabilities:
Account Payable 90,660 152,600
Salaries Payable 8,000 4,000
Outstanding Liabilities 4,000 16,500
Total Capital & Liabilities 1,170,660 1,113,000

Additional information:

1. The company paid interest of Tk. 6,000 and income tax of Tk. 34,000.
2. Dividend declared and paid in 2013 Tk. 65,900.
3. Common Stock was issued for Tk. 105,000.
4. Depreciation expense for 2013 Tk. 75,000.
5. Equipment costing Tk. 50,000 with accumulated depreciation of Tk. 60,000 was sold for
Tk. 47,000 (against of Tk. 7,000) and equipment costing Tk. 40,000 was purchased for
cash.
6. Land was purchased for 75,000 cash. The company intends to build a building on the
land. Currently the company leases a building for its operation.

Requirement:

(a) Prepare a Statement of Cash Flows under the indirect method.

(b) Also prepare any necessary supplemental schedule.
Problem # 3

The following comparative Statement of Financial Positions and other data are for ZZEN
Ltd.

ZZEN Ltd.

Statement of Financial Position

As on 31.12.2012 & 31.12.2013

Assets 2012 2013

Taka Taka
Non-Current Assets:
Land 8,000 8,000
Building 40,000 32,000
Machineries 30,000 34,000
Patents 2,000 1,800
Fictitious Assets:
Bonds Discount 4,000 3,600
Current Assets:
Closing Inventory 30,000 30,000
Account Receivable 20,000 41,400
Cash 80,000 88,800
Total Assets 214,000 239,600
Capital & Liabilities
Equity Share Capital of Tk. 10 each 70,000 87,000
Retained Earnings 30,000 39,000
Bonds Payable 44,000 44,000
Accumulated Depreciation- Equipment 10,000 5,600
Current Liabilities 60,000 64,000
Total Capital & Liabilities 214,000 239,600

Additional information:

(a) Income for the period was Tk. 20,000.

(b) One building was sold for Tk. 1,400. The cost of the building was Tk. 8,000 and the book
value at the time of sale Tk. 2,000.
(c) Depreciation charged for the year was Tk. 1,600.
(d) Equity shares were issued during the year was Tk. 10,000.
(e) Dividend: cash Tk.4,000, share tk. 7,000.
Requirement:

(i) Prepare a Statement of Cash Flows under the indirect method.

(ii) Also prepare any necessary supplemental schedule.

Problem # 4

The following comparative Statement of Financial Positions, Statement of Comprehensive

Income and other data are for Holy Co. Ltd.

Holy Co. Ltd.

Statement of Financial Position
As on 31.12.2012 & 31.12.2013
Assets 2013 2012
Taka Taka
Non-Current Assets:
Property, Plant and Equipment 120,000 156,000
Current Assets:
Closing Inventory 50,000 70,000
Account Receivable 56,000 28,000
Cash 58,000 26,000
Total Assets 284,000 280,000
Capital & Liabilities
Equity Share Capital of Tk. 10 each 36,000 28,000
Retained Earnings 90,000 76,000
Accumulated Depreciation 40,000 48,000
Bonds Payable 54,000 66,000
Provision for Taxation 10,000 16,000
Accounts Payable 54,000 46,000
Total Capital & Liabilities 284,000 280,000

Holy Co. Ltd.

Statement of Financial Position
For the year ended on 31st December, 2013
`Particulars Taka Taka
Sales 440,000
Less: Cost of Goods Sold 360,000
Gross Profit 80,000
Less: Operating Expenses:
Selling & Distribution Expenses 28,000
Office & Administrative Expenses 20,000 48,000
Operative Income 32,000
Less: Interest expense 4,000
Net Profit Before Tax 28,000
Less: Provision for Taxation 8,000
Retained Earnings 20,000

Additional information:
1. All sales and purchases were on account.
2. During the year equipment was sold for Tk. 17,000 cash. This equipment costs
Tk.36,000 originally and had a book value of Tk. 17,000 at the time of sale.
3. All depreciation expenses were in the Selling Expense category.
4. Dividend declared and paid Tk.6,000.

Requirement:
Prepare a Statement of Cash Flows under the indirect method. Also prepare any necessary
supplemental schedule.
Problem # 5

The following comparative Statement of Financial Positions and other data are for Danish
Weigle Co. Ltd.

Danish Weigle Co. Ltd.

Statement of Financial Position

As on 31.12.2012 & 31.12.2013

Assets 2012 2013

Taka Taka
Non-Current Assets:
Land 200,000 260,000
Building 400,000 400,000
Machineries 456,000 310,000
Current Assets:
Closing Inventory 302,900 284,000
Account Receivable 99,000 104,000
Pre-paid expenses 33,560 42,000
Cash 78,000 90,000
Total Assets 1,569,460 1,490,000
Capital & Liabilities
Equity Share Capital of Tk. 10 each 400,000 300,000
Retained Earnings 382,000 360,000
Bonds Payable 500,000 600,000
Accumulated Depreciation- Machinery 90,000 70,000
Accumulated Depreciation- Building 120,000 80,000
Account Payable 77,460 80,000
Total Capital & Liabilities 1,569,460 1,490,000
Additional information:

(a) Operating Expense include depreciation expense of Tk. 84,000.

(b) Land was sold for cash at book value.
(c) Net income for 2013 was Tk. 78,000.
(d) Machinery was purchased for Tk. 190,000 cash. In addition, machinery costing Tk. 44,000
with a book value of Tk. 20,000 was sold for Tk. 16,200 cash.
(e) Dividend paid in cash Tk.54,000.
(f) Bonds were converted at face value by issuing 10,000 shares of Tk. 10 per equity share.
(g) Net sales for 2013 totaled at Tk. 840,000.

Requirement:

(i) Prepare a Statement of Cash Flows under the indirect method.

(ii) Also prepare any necessary supplemental schedule.