How do you treat doubtful debt expense and deferred taxation when preparing brass flow statements?
Answers:
You cold-shoulder them. Doubtful debts would own be taken consideration of when you divide increase/decrease in accounts receivable cos the AR is already network of any allowance for doubtful debts. Your lolly flow statement starts sour beside profit BEFORE taxation, so current and deferred taxes do not amount surrounded by a lolly flow statement EXCEPT for taxes if truth be told salaried or refund. This you transport into vindication up to that time arriving at Net lolly from operating endeavours.
Click on the intermingle for the IAS 7 Cash Flow statements, scroll to the ultimate bit and pinch a look at the drawn cfs by indirect method.
Indirect Method Cash Flow Statement -
Cash flows from operating activities
Profit formerly taxation 3,350
Adjustments for:
Depreciation 450
Foreign exchange loss 40
Investment income (500)
Interest expense 400
Sub-total 3,740
Increase in trade and other receivables (500)
Decrease in inventories 1,050
Decrease in trade payables (1,740)
Cash generate from operation 2,550
Interest salaried (270)
Income taxes compensated (900)
Net change from operating events 1,380