PAS 7 and PAS 41 Summary

PAS 7 Summary - CFAS
PAS 7 Explanation of Cash Streams requires a substance to display an articulation of cash

streams as a fundamentally portion of its essential financial statements. Cash streams are
classified and displayed into working exercises (either utilizing the 'direct' or 'indirect' strategy),
contributing exercises or financing exercises, with the last mentioned two categories by and large
displayed on a gross basis.
Objective of PAS 7
The objective of PAS 7 is to require the introduction of data around the chronicled changes in
cash and cash equivalents of an entity by means of a statement of cash flows, which classifies
cash flows during the period agreeing to operating, investing, and financing activities.
Fundamental Principal in PAS 7

All entities that get ready money related explanations in congruity with IFRSs are required to
display an explanation of cash flows.
The articulation of cash streams examinations changes in cash and cash reciprocals amid a
period. Cash and cash equivalents contain cash on hand and demand stores, in conjunction with
short-term, exceedingly fluid speculations that are promptly convertible to a known sum of cash,
which are subject to an immaterial hazard of changes in esteem. Guidance notes show that a
speculation regularly meets the definition of a cash equivalent when it features a development of
three months or less from the date of securing. Value ventures are ordinarily avoided, unless they
are in substance a cash comparable (e.g., favored offers obtained within three months of their
indicated recovery date). Bank overdrafts which are repayable on request and which shape an
indispensably portion of an entity's cash management are moreover included as a component of
cash and cash equivalents.
Statement of Cash Flows

A Statement of Cash Flows is a component of financial statements summarizing the operating,
investing, and financing activities of an entity.
In Basic Dialect, the statement of cash flows gives data almost the cash receipts and cash
payments of an entity during a period.
An entity might plan an explanation of cash streams and show it as an indispensably portion of
monetary articulations for each period for which money related articulations are presented.
The primary purpose of a statement of cash flows is to supply significant data almost cash
receipts and cash payments of an entity amid a period.
Cash and Cash Equivalents
The statement of cash flows is outlined to supply data about the change in an entity's cash and
cash equivalent.
Cash comprises cash on hand and demand deposits.
Cash equivalents are short-term exceedingly fluid investments that are promptly convertible to
known amount of cash and which are subject to an inconsequential risk of alter in value.
PAS 7, section 7, give that an investment regularly qualifies as a cash equivalent only when it
has brief development of three months or less from date of acquisition. In other words, the
investment must be obtained three months or less before the date of maturity.
Classification of cash flows
Cash flows are inflows and outflows of cash and cash equivalent.
The statement of cash flows should report cash flows during the period classified as operating,
investing, and financing activities.
Operating Activities
Operating Activities are the main revenue-producing activities of the entity that are not
contributing or financing activities, so operating cash flows incorporate cash received from
clients and cash paid to providers and workers. In other words, operating activities for the most
part result from exchanges and other events that enter the assurance of net income or loss.
Investing Activities
Investing Activities are the cash flows inferred from the acquisition and disposal of long-term
assets and other investments not included in cash equivalent.
Financing Activities
Financing activities are cash flows inferred from the equity and capital and borrowings of the
entity. In other words, financing activities are the cash flows that result from transactions:
a. between the substance and the proprietors - equity financing
b. between the entity and the creditors - debt financing
financing activities incorporate money streams from exchanges including nontrade liabilities and
value of an entity.
PAS 41 Summary
Objective of PAS 41
The objective of PAS 41 is to set up standards of accounting for agrarian activity – the
administration of the biological change of biological resources (living plants and animals) into
agrarian create (a harvested product of the entity's biological resources).
Scope
PAS 41 applies to biological resources but for bearer plants, agrarian produce at the point of
harvest, and government grants related to these biological resources. It does not apply to land-
related to agrarian movement, intangible resources related to agrarian movement, government
grants related to bearer plants, and bearer plants. In any case, it does apply to produce growing
on bearer plants.
Initial Recognition
An entity recognizes a biological asset or agriculture produce only when the entity controls the
asset as a result of past events, it is probable that future economic benefits will flow to the entity,
and the fair value or cost of the asset can be measured reliably.
Measurement
Biological assets within the scope of PAS 41 are measured on initial recognition and at
subsequent reporting dates at fair value less estimated costs to sell, unless a fair value cannot be
reliably measured.
The gain on initial recognition of biological assets at fair value fewer costs to sell, and changes in
fair value fewer costs to the selling of biological assets during a period, are included in profit or
loss.
If circumstances change and fair value becomes reliably measurable, a switch to fair value with
fewer costs to sell is required.
Other issues
The change in reasonable esteem of natural resources is portion physical alter (development,
etc.) and portion unit cost alter. Isolated divulgence of the two components is energized, not
required.
Agricultural produce is measured at reasonable esteem fewer costs to offering at gather, and this
estimation is considered the fetched of the item at that time (for the purposes of PAS 2
Inventories or any other appropriate standard).
Agricultural arrive is accounted for beneath PAS 16 Property, Plant, and Hardware. In any case,
organic resources (other than conveyor plants) that are physically connected to arrival are
measured as organic resources isolated from the arrival. In a few cases, the assurance of the
reasonable esteem fewer costs to offer of the organic resource can be based on the reasonable
esteem of the combined resource (arrive, changes, and natural resources).
Government Grants
Unrestricted government grants received in regard to natural resources measured at reasonable
esteem fewer costs to offer are perceived in benefit or misfortune when the allow gets to be
receivable.
In the event that such a allow is conditional (including where the grant requires an entity not to
lock in in certain agrarian action), the entity perceives the allow in benefit or misfortune as it
were when the conditions have been met.
Disclosure
aggregate gain or loss from the initial recognition of biological assets and agricultural produce
and the change in fair value less costs to sell during the period* [PAS 41.40] description of an
entity's biological assets, by broad group [PAS 41.41] description of the nature of an entity's
activities with each group of biological assets and non-financial measures or estimates of
physical quantities of output during the period and assets on hand at the end of the period [PAS
41.46] information about biological assets whose title is restricted or that are pledged as security
[PAS 41.49] commitments for development or acquisition of biological assets [PAS 41.49]
financial risk management strategies [PAS 41.49] reconciliation of changes in the carrying
amount of biological assets, showing separately changes in value, purchases, sales, harvesting,
business combinations, and foreign exchange differences* [PAS 41.50] * Separate and/or
additional disclosures are required where biological assets are measured at cost less accumulated
depreciation [PAS 41.55] Disclosure of a quantified description of each group of biological
assets, distinguishing between consumable and bearer assets or between mature and immature
assets, is encouraged but not required.
[PAS 41.43] If fair value cannot be measured reliably, additional required disclosures include:
[PAS 41.54] description of the assets an explanation of why fair value cannot be reliably
measured if possible, a range within which fair value is highly likely to lie depreciation method
useful lives or depreciation rates gross carrying amount and the accumulated depreciation,
beginning and ending.
If the fair value of biological assets previously measured at cost subsequently becomes available,
certain additional disclosures are required.
[PAS 41.56] Disclosures relating to government grants include the nature and extent of grants,
unfulfilled conditions, and significant decreases expected in the level of grants.

PAS 7 and PAS 41 Summary

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PAS 7 Summary - CFAS

PAS 7 Explanation of Cash Streams requires a substance to display an articulation of cash

Fundamental Principal in PAS 7

Statement of Cash Flows

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