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  • IFRS in Practice

    Applying IAS 7 Statement of cash flows

Publikation:

IFRS in Practice 2019-2020: IAS 7 Statement of Cash Flows

03. Juli 2020

Introduction

This edition of IFRS in Practice looks at a number of practical issues which often arise from the application of IAS 7 Statement of Cash Flows. The original version of IAS 7 was first issued in 1992, with the International Accounting Standards Board (IASB) adopting the standard in April 2001. Being one of the older standards in the current suite of IFRSs, IAS 7 is shorter and more summarised than new and revised standards, which have been issued more recently by the IASB. Modifications to IAS 7 since it was originally published have been limited, meaning that judgement can be required when interpreting how it should be applied with some new IFRSs (e.g. IFRS 9 Financial Instruments – see Section 10). One of the only significant updates to IAS 7 occurred in January 2016 when the IASB added paragraphs 44A – 44E requiring disclosures relating to the changes in liabilities arising from financing activities (see Section 4.3.1.). The introduction of IFRS 16 Leases, which was effective for annual reporting periods beginning on or after 1 January 2019 has also had a significant impact on the statement of cash flows. Prior to IFRS 16, many leases were classified as operating type (i.e. ‘off balance sheet’) from the perspective of lessees, with their respective cash flows included in operating activities. IFRS 16 requires most leases to be recorded ‘on balance sheet’, and therefore, cash outflows arising from financing activities will generally increase due to IFRS 16. A discussion of the impact of IFRS 16 on the statement of cash flows is included in Section 13. 

 

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