Income statement format as per US GAAP/IFRS....
Sales. *****
Less COGS. (-)*****
= Gross profit. =******
Less Operating expa (-)****
=Net opearating income ******
+Non Opearating income+****
(-)Non Opearating expa(-)****
=Earning before int&tax*****
(-)Finance costs. (-)****
(-) Income tax expa. (-)****
=Net income (PAT). ********
NON OPEARATING INCOME Incldes Income from investment,Gain on disposal of fixed assets or investment
Non Opearating expenses includes Loss on sale of fixed assets or investment, impairement loss, Cash theft,plant destroyed etc
How to compute cashflow after tax CFAT,as per US GAAP (indirect Method, starting from profit after tax).... please refer...
Net income PAT. ******
Add: Non operating expenses :
Loss on sale of fix assets or inv***
Impairement loss. ****
Finance costs. *****
Income tax expense. ****. +****
Add:Non Cash expenses:
Depreciation. +*****
Less: Non operating income
Gain on sale of fixed assets,inv***
Income from investment. ***. (-)****
=Operating Cash Profit. =******
+Income fr investment received +******
(-) Finance costs paid. (-)*****
(-)Income tax paid. (-)*****
=CFAT. =+/-******
HOW TO COMPUTE CFO (INDIRECT METHOD) AS PER US GAAP.....
CFAT AS ABOVE. +/-******
+/- Increase/Decrease in current assets and current liabilities,except cash,bank balance,bank overdraft...
Increase in current assets. (-)*****
Decease in current assets. + *****
Increase in current liabilities +*****
Decrease in current liabilities. (-)****
=CASHFLOW FR OPERATION +/-****CFO
CASHFLOW FR OPERATION CFO BY DIRECT METHOD AS PER US GAAP....
CASH SALES. +******
COLLECTION FROM CUSTOMER +*****
CASH PURCHASES. (-)****
PAYMENT TO SUPPLIERS. (-)*****
WAGES PAID. (-)*****
OVERHEADS PAID. (-)****
INCOME FR INVESTMENT RECD +****
FINANCE COSTS/INTEREST PAID (-)***
INCOME TAX PAID. (-)****
= CFO. =+/-*****
NOW SOLVE FOLLOWING ILLUSTRATION.
Illustration :question ⁉️ on cashflow statement:
ILLUSTRATION.1..PREPARE INCOME STATEMENT AND COMPUTE CASHFLOW AFTER TAX... SALES 1500.000, COST OF GOOD SOLD 8,00,000 (INCL DEPRECIATION 120,000), OPERATING EXPS 100.000(INCL DEPRE 90.000), INCOME FROM INVESTMENT 100,000(ACTUAL RECEIVED 120,000),LOSS ON SALE OF PATENT 20,000 ,IMPAIREMENT LOSS 5,000, INTEREST ON BANK LOAN 50,000 (ACTUAL PAID 40,000) ,INCOME TAX EXPS 160,000 (ACTUAL TAX PAID 90,000)
ILLUSTRATION2: OPERATING CASH PROFIT +2,00,000 , INCOME RECEIVED FROM INVESTMENT 90,000, FINANCE COST PAID 40,000,INCOME TAX PAID 100,000, INCREASE IN INVENTORY 40,000,DECREASE IN TR RECEIVABLE 60,000,Increase IN TR PAYABLE 20,000,Sale OF INVESTMENT 100,000, purchase OF PLANTS 200,000,ISSUE OF EQUITY SHARES NOMINAL VALE 100,000 WITH PREMIUM 10%,PAYMENT OF EQUITY DIVIDENDS 50,000,REPAYMENT OF BANK LOAN 80,000,AQUISITION OF BUSINESS VALUED 500,000 BY ISSUING OUR EQUITY SAHRES T PAR400,000 & balance paid in cash,OP CASH BAL 100,000, CL CASH BAL 200,000, CL BANK OVERDRAFT 130,000, COMPUTE CASH GENERATED FROM ALL ACTIVITIES(CFO+CFI+CFF) & COMPUTE CLOSING CASH & CASH EQUIVALENTS
ILLUSTRATION 3: CASH SALES 600,000, PAYMENT TO SUPPLIER 300,000. COLLECTION FROM CUSTOMERS 400,000,CASH PURCHASES 200,000, WAGES PAID 90,000, OVERHEADS PAID 80,000, INTEREST PAID 60,000, INTEREST RECEIVED 70,000,INCOME TAX PAID 90,000, BUSINESS AQUISITION 300,000, REPURCHASE OF EQUITY SHARES 150,000, PAYMENT OF EQUITY DIVIDEND 50,000, OP CASH & CASH EQUIVALENTS (-)90,000 COMPUTE CL CASH & CASH EQUIVALENTS
ANSWER...Wait...you will get in the evening...
Best wishes 🍀 from Prof Mahaley Head Gmsisuccess Mumbai Tel 9773464206
