Question:
Refer to the situation described in BE 4–11 and BE 4–12. How might your solution to those brief
exercises differ if Hilliard Healthcare Co. prepares its statement of cash flows according to International
Financial Reporting Standards?
Answer:
Under IFRS, interest received and interest paid usually are classified as investing and financing cash
flows, respectively, not operating cash flows as with U.S. GAAP. The revised cash flow categories
usually would appear as follows:
Cash flows from operating activities:
Collections from customers $ 660,000
Payment of operating expenses (440,000)
Net cash flows from operating activities $220,000
Cash flows from investing activities:
Proceeds from note receivable collection $100,000
Sale of land 40,000
Interest on note receivable 12,000
Purchase of equipment (120,000)
Net cash flows from investing activities $32,000
Cash flows from financing activities:
Issuance of common stock $200,000
Refer to the situation described in BE 4–11 and BE 4–12. How might your solution to those brief
exercises differ if Hilliard Healthcare Co. prepares its statement of cash flows according to International
Financial Reporting Standards?
Answer:
Under IFRS, interest received and interest paid usually are classified as investing and financing cash
flows, respectively, not operating cash flows as with U.S. GAAP. The revised cash flow categories
usually would appear as follows:
Cash flows from operating activities:
Collections from customers $ 660,000
Payment of operating expenses (440,000)
Net cash flows from operating activities $220,000
Cash flows from investing activities:
Proceeds from note receivable collection $100,000
Sale of land 40,000
Interest on note receivable 12,000
Purchase of equipment (120,000)
Net cash flows from investing activities $32,000
Cash flows from financing activities:
Issuance of common stock $200,000
