Statement of cash flows

Learning objectives

• Explain why the purchase of an asset and the receipt of the related grant are often shown as separate items in the statement of cash flows, whatever presentation is adopted in the statement of financial position.L2, L3

Normative references

• IAS 20 §28Because the purchase of assets and the receipt of related grants can cause major movements in cash flows, these movements are often disclosed as separate items in the statement of cash flows (gross investment), regardless of how the grant is presented in the statement of financial position.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• An entity buys equipment and receives an asset grant to finance it. How do the purchase and the grant appear in the statement of cash flows?L2
• Perrin presents its asset grants as deferred income. At the start of the year, deferred income is {opening_balance}. It receives {grants_received} of new grants for equipment bought during the year, and releases {releases} to profit or loss. Calculate closing deferred income and the amount of grant receipt to be presented as a flow separate from the purchase of the equipment.L3