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Ind AS 7, Statement of Cash Flows, Summary

Indian Accounting Standard (Ind AS) 7 Summary

Indian Accounting Standard (Ind AS) 7, Statement of Cash Flows requires the entity to provide information about historical changes in its cash and cash equivalents in a statement of cash flows. The statement of cash flows classifies cash flows during the period into those from operating, investing and financing activities.

Cash and cash equivalents for the purposes of the statement of cash flows include certain short-term investments and in some cases, bank overdrafts.

Taxes paid are separately disclosed and classified as operating activities unless it is practicable to identify them with, and therefore, classify them as, financing or investing activities.

Cash flows from operating activities may be presented under either the direct method or the indirect method. However, in case of listed entities, the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 require the use of the indirect method in preparing the cash flow statement.

The entity presents its cash flows in the manner most appropriate to its business.

Foreign currency cash flows are translated at the exchange rates at the date of the cash flows (or using averages when appropriate).

Generally, all financing and investing cash flows are reported gross. Cash flows are offset only in limited circumstances.

For annual reporting periods beginning on or after 1 April 2017, an entity is required to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.

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