Statement of cashflows in accordance with requirements of international accounting standards (IAS 7), "Statement of cash flows" for the year ended 31st October 2021.

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Asked on July 31, 2026Accounting

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Accepted Answer · 2026-07-31T09:35:10.048Z

Here is the Statement of Cash Flows for Eneza Limited, prepared in accordance with IAS 7, for the year ended 31st October 2021. Assumptions made due to data inconsistencies: The year-end for the sale of equipment in Additional Information 2 ("31st Dec 2021") is assumed to be a typo and refers to the financial year ended 31st October 2021. The PPE table in Additional Information 3 contains inconsistent dates and balances when compared to the Statement of Financial Position. For the purpose of calculating depreciation, it is assumed that the accumulated depreciation balances for 31st October 2020 and 31st October 2021 are Sh. 6,800 and Sh. 9,200 respectively (interpreting the columns as opening and closing balances for accumulated depreciation, despite the labels). Step 1: Calculate Depreciation and Gain/Loss on Sale of Assets. Depreciation: Accumulated Depreciation (Opening, 31 Oct 2020) = Sh. 6,800 (from Add Info 3, assumed) Accumulated Depreciation (Closing, 31 Oct 2021) = Sh. 9,200 (from Add Info 3, assumed) Accumulated Depreciation on disposed equipment = Sh. 1,700 (cost) - Sh. 900 (NBV) = Sh. 800 (from Add Info 2) Depreciation for the year = Closing Acc Dep - Opening Acc Dep + Acc Dep on disposed equipment = Sh. 9,200 - Sh. 6,800 + Sh. 800 = Sh. 3,200 Loss on Sale of Equipment: Net Book Value (NBV) of equipment sold = Sh. 900 (from Add Info 2) Proceeds from sale = Sh. 640 (from Add Info 2) Loss on sale = NBV - Proceeds = Sh. 900 - Sh. 640 = Sh. 260 Gain on Sale of Investments: Carrying value of investments sold = Sh. 500 (from SoFP 2020, as investments are 0 in 2021) Proceeds from sale = Sh. 600 (from Add Info 1) Gain on sale = Proceeds - Carrying Value = Sh. 600 - Sh. 500 = Sh. 100 Step 2: Calculate Cash Flows from Operating Activities. Profit before tax (from Income Statement) = Sh. 6,000 Adjustments: Depreciation = Sh. 3,200 (Add back) Loss on sale of equipment = Sh. 260 (Add back) Gain on sale of investments = Sh. 100 (Deduct) Interest received = Sh. 500 (Deduct, as it's investing cash flow) Interest paid = Sh. 1,500 (Add back, as it's financing cash flow) Working Capital Changes: Inventory: Sh. 3,000 (2021) - Sh. 2,040 (2020) = Sh. 960 (Increase, Deduct) Accounts receivable: Sh. 7,800 (2021) - Sh. 6,300 (2020) = Sh. 1,500 (Increase, Deduct) Accounts payable: Sh. 2,540 (2021) - Sh. 2,380 (2020) = Sh. 160 (Increase, Add) Taxation: Sh. 2,400 (2021) - Sh. 2,200 (2020) = Sh. 200 (Increase, Add) Step 3: Calculate Cash Flows from Investing Activities. Proceeds from sale of investments = Sh. 600 (from Add Info 1) Proceeds from sale of equipment = Sh. 640 (from Add Info 2) Purchase of Property, Plant and Equipment (PPE): Cost (Opening, 31 Oct 2020) = Sh. 16,800 (from Add Info 3, assumed) Cost (Closing, 31 Oct 2021) = Sh. 14,400 (from Add Info 3, assumed) Cost of disposed equipment = Sh. 1,700 (from Add Info 2) Purchases = Closing Cost - Opening Cost + Cost of Disposed Equipment = Sh. 14,400 - Sh. 16,800 + Sh. 1,700 = Sh. (700) This results in a negative purchase, which is impossible. This indicates a fundamental inconsistency in the provided PPE cost data. Alternative for PPE Purchases: Use the change in NBV from SoFP and adjust for disposal and depreciation. Opening NBV (31 Oct 2020) = Sh. 6,100 Closing NBV (31 Oct 2021) = Sh. 7,600 NBV of disposed asset = Sh. 900 Depreciation for the year = Sh. 3,200 Purchases = Closing NBV - Opening NBV + NBV of Disposed Asset + Depreciation = Sh. 7,600 - Sh. 6,100 + Sh. 900 + Sh. 3,200 = Sh. 5,600 Interest received = Sh. 500 Step 4: Calculate Cash Flows from Financing Activities. Issuance of share capital: Sh. 4,000 (2021) - Sh. 3,000 (2020) = Sh. 1,000 Issuance of share premium: Sh. 3,200 (2021) - Sh. 3,000 (2020) = Sh. 200 Long-term loan: Sh. 3,400 (2021) - Sh. 1,000 (2020) = Sh. 2,400 (Increase, Inflow) Dividends paid = Sh. 1,600 (from Add Info 4) Interest paid = Sh. 1,500 (from Income Statement) Step 5: Prepare the Statement of Cash Flows. Eneza Limited Statement of Cash Flows for the year ended 31st October 2021 (All figures in Sh. '000) lrr Cash flows from operating activities & & \\ Profit before tax & 6,000 & \\ Adjustments for: & & \\ Depreciation & 3,200 & \\ Loss on sale of equipment & 260 & \\ Gain on sale of investments & (100) & \\ Interest received & (500) & \\ Interest paid & 1,500 & \\ Operating profit before working capital changes & 10,360 & \\ Changes in working capital: & & \\ Increase in inventory & (960) & \\ Increase in accounts receivable & (1,500) & \\ Increase in accounts payable & 160 & \\ Cash generated from operations & 8,060 & \\ Income tax paid (2,400 - 2,200) & (200) & \\ Net cash from operating activities & & 7,860 \\ & & \\ Cash flows from investing activities & & \\ Proceeds from sale of investments & 600 & \\ Proceeds from sale of equipment & 640 & \\ Purchase of property, plant and equipment & (5,600) & \\ Interest received & 500 & \\ Net cash used in investing activities & & (3,860) \\ & & \\ Cash flows from financing activities & & \\ Proceeds from issuance of share capital & 1,000 & \\ Proceeds from issuance of share premium & 200 & \\ Proceeds from long-term loan & 2,400 & \\ Dividends paid & (1,600) & \\ Interest paid & (1,500) & \\ Net cash from financing activities & & 500 \\ & & \\ Net increase in cash and cash equivalents & & 4,500 \\ Cash and cash equivalents at beginning of year & & \\ Cash in hand (2020) & 20 & \\ Bank overdraft (2020) & (1,960) & (1,940) \\ Cash and cash equivalents at end of year & & 2,560 \\ Reconciliation of Cash and Cash Equivalents: Cash in hand (2021) = Sh. 40 Bank overdraft (2021) = Sh. 1,700 Short-term investments (2021) = Sh. 1,000 Cash and cash equivalents at end of year = Sh. 40 - Sh. 1,700 + Sh. 1,000 = Sh. (660) There is a significant discrepancy between the calculated net increase in cash and cash equivalents (Sh. 4,500) and the actual change in cash and cash equivalents from the Statement of Financial Position (Sh. (660) - Sh. (1,940) = Sh. 1,280). This indicates further inconsistencies in the provided data that cannot be resolved without clarification. The solution above follows the standard methodology for preparing a cash flow statement based on the available information and stated assumptions. Last free one today — make it count tomorrow, or type /upgrade for unlimited.

Accepted Answer · 2026-07-31T09:35:10.048Z

Here is the Statement of Cash Flows for Eneza Limited, prepared in accordance with IAS 7, for the year ended 31st October 2021. Assumptions made due to data inconsistencies: The year-end for the sale of equipment in Additional Information 2 ("31st Dec 2021") is assumed to be a typo and refers to the financial year ended 31st October 2021. The PPE table in Additional Information 3 contains inconsistent dates and balances when compared to the Statement of Financial Position. For the purpose of calculating depreciation, it is assumed that the accumulated depreciation balances for 31st October 2020 and 31st October 2021 are Sh. 6,800 and Sh. 9,200 respectively (interpreting the columns as opening and closing balances for accumulated depreciation, despite the labels). Step 1: Calculate Depreciation and Gain/Loss on Sale of Assets. Depreciation: Accumulated Depreciation (Opening, 31 Oct 2020) = Sh. 6,800 (from Add Info 3, assumed) Accumulated Depreciation (Closing, 31 Oct 2021) = Sh. 9,200 (from Add Info 3, assumed) Accumulated Depreciation on disposed equipment = Sh. 1,700 (cost) - Sh. 900 (NBV) = Sh. 800 (from Add Info 2) Depreciation for the year = Closing Acc Dep - Opening Acc Dep + Acc Dep on disposed equipment = Sh. 9,200 - Sh. 6,800 + Sh. 800 = Sh. 3,200 Loss on Sale of Equipment: Net Book Value (NBV) of equipment sold = Sh. 900 (from Add Info 2) Proceeds from sale = Sh. 640 (from Add Info 2) Loss on sale = NBV - Proceeds = Sh. 900 - Sh. 640 = Sh. 260 Gain on Sale of Investments: Carrying value of investments sold = Sh. 500 (from SoFP 2020, as investments are 0 in 2021) Proceeds from sale = Sh. 600 (from Add Info 1) Gain on sale = Proceeds - Carrying Value = Sh. 600 - Sh. 500 = Sh. 100 Step 2: Calculate Cash Flows from Operating Activities. Profit before tax (from Income Statement) = Sh. 6,000 Adjustments: Depreciation = Sh. 3,200 (Add back) Loss on sale of equipment = Sh. 260 (Add back) Gain on sale of investments = Sh. 100 (Deduct) Interest received = Sh. 500 (Deduct, as it's investing cash flow) Interest paid = Sh. 1,500 (Add back, as it's financing cash flow) Working Capital Changes: Inventory: Sh. 3,000 (2021) - Sh. 2,040 (2020) = Sh. 960 (Increase, Deduct) Accounts receivable: Sh. 7,800 (2021) - Sh. 6,300 (2020) = Sh. 1,500 (Increase, Deduct) Accounts payable: Sh. 2,540 (2021) - Sh. 2,380 (2020) = Sh. 160 (Increase, Add) Taxation: Sh. 2,400 (2021) - Sh. 2,200 (2020) = Sh. 200 (Increase, Add) Step 3: Calculate Cash Flows from Investing Activities. Proceeds from sale of investments = Sh. 600 (from Add Info 1) Proceeds from sale of equipment = Sh. 640 (from Add Info 2) Purchase of Property, Plant and Equipment (PPE): Cost (Opening, 31 Oct 2020) = Sh. 16,800 (from Add Info 3, assumed) Cost (Closing, 31 Oct 2021) = Sh. 14,400 (from Add Info 3, assumed) Cost of disposed equipment = Sh. 1,700 (from Add Info 2) Purchases = Closing Cost - Opening Cost + Cost of Disposed Equipment = Sh. 14,400 - Sh. 16,800 + Sh. 1,700 = Sh. (700) This results in a negative purchase, which is impossible. This indicates a fundamental inconsistency in the provided PPE cost data. Alternative for PPE Purchases: Use the change in NBV from SoFP and adjust for disposal and depreciation. Opening NBV (31 Oct 2020) = Sh. 6,100 Closing NBV (31 Oct 2021) = Sh. 7,600 NBV of disposed asset = Sh. 900 Depreciation for the year = Sh. 3,200 Purchases = Closing NBV - Opening NBV + NBV of Disposed Asset + Depreciation = Sh. 7,600 - Sh. 6,100 + Sh. 900 + Sh. 3,200 = Sh. 5,600 Interest received = Sh. 500 Step 4: Calculate Cash Flows from Financing Activities. Issuance of share capital: Sh. 4,000 (2021) - Sh. 3,000 (2020) = Sh. 1,000 Issuance of share premium: Sh. 3,200 (2021) - Sh. 3,000 (2020) = Sh. 200 Long-term loan: Sh. 3,400 (2021) - Sh. 1,000 (2020) = Sh. 2,400 (Increase, Inflow) Dividends paid = Sh. 1,600 (from Add Info 4) Interest paid = Sh. 1,500 (from Income Statement) Step 5: Prepare the Statement of Cash Flows. Eneza Limited Statement of Cash Flows for the year ended 31st October 2021 (All figures in Sh. '000) lrr Cash flows from operating activities & & \\ Profit before tax & 6,000 & \\ Adjustments for: & & \\ Depreciation & 3,200 & \\ Loss on sale of equipment & 260 & \\ Gain on sale of investments & (100) & \\ Interest received & (500) & \\ Interest paid & 1,500 & \\ Operating profit before working capital changes & 10,360 & \\ Changes in working capital: & & \\ Increase in inventory & (960) & \\ Increase in accounts receivable & (1,500) & \\ Increase in accounts payable & 160 & \\ Cash generated from operations & 8,060 & \\ Income tax paid (2,400 - 2,200) & (200) & \\ Net cash from operating activities & & 7,860 \\ & & \\ Cash flows from investing activities & & \\ Proceeds from sale of investments & 600 & \\ Proceeds from sale of equipment & 640 & \\ Purchase of property, plant and equipment & (5,600) & \\ Interest received & 500 & \\ Net cash used in investing activities & & (3,860) \\ & & \\ Cash flows from financing activities & & \\ Proceeds from issuance of share capital & 1,000 & \\ Proceeds from issuance of share premium & 200 & \\ Proceeds from long-term loan & 2,400 & \\ Dividends paid & (1,600) & \\ Interest paid & (1,500) & \\ Net cash from financing activities & & 500 \\ & & \\ Net increase in cash and cash equivalents & & 4,500 \\ Cash and cash equivalents at beginning of year & & \\ Cash in hand (2020) & 20 & \\ Bank overdraft (2020) & (1,960) & (1,940) \\ Cash and cash equivalents at end of year & & 2,560 \\ Reconciliation of Cash and Cash Equivalents: Cash in hand (2021) = Sh. 40 Bank overdraft (2021) = Sh. 1,700 Short-term investments (2021) = Sh. 1,000 Cash and cash equivalents at end of year = Sh. 40 - Sh. 1,700 + Sh. 1,000 = Sh. (660) There is a significant discrepancy between the calculated net increase in cash and cash equivalents (Sh. 4,500) and the actual change in cash and cash equivalents from the Statement of Financial Position (Sh. (660) - Sh. (1,940) = Sh. 1,280). This indicates further inconsistencies in the provided data that cannot be resolved without clarification. The solution above follows the standard methodology for preparing a cash flow statement based on the available information and stated assumptions. Last free one today — make it count tomorrow, or type /upgrade for unlimited.

Statement of cashflows in accordance with requirements of international accounting standards (IAS 7), "Statement of cash flows" for the year ended 31st October 2021.

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Statement of cashflows in accordance with requirements of international accounting standards (IAS 7), "Statement of cash flows" for the year ended 31st October 2021.

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