IAS 7: interest and dividends

Learning objectives

• Distinguish the classification of interest and dividend cash flows according to the nature of the entity.L2
• Determine the classification of dividends paid.L2, L3

Normative references

The syntheses of the reference register are written in French: only the paragraph reference is shown here.

2 questions

• Éolienne SA, an industrial entity with no specified main business activity (case convention), paid EUR 300,000 of dividends and EUR 80,000 of interest on a bank loan. Under IFRS 18, in which category of its statement of cash flows are these two payments classified?L2
• Prêt-Lac SA has as its main business activity providing financing to customers (specified main business activity, case fact); in its statement of profit or loss, it classifies in the operating category the interest it pays on funds raised to finance its loans (case data). It paid EUR 410,000 of that interest and EUR 150,000 of dividends. Its management proposes to classify both payments in financing in the statement of cash flows, "like other entities". Write a short note concluding on the classification of interest paid, distinguishing rule, case facts and professional judgement.L3