Financial Reporting, Financial Statement Analysis and Valuation
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Chapter 3, Problem 4QE
To determine

Discuss as per US Generally Accepted Accounting Principles (GAAP) that in statement of cash flow classifies cash expense of interest under operating activity and cash expense of dividends to shareholders under financing activity.

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Under U.S. GAAP, the statement of cash flows classifies cash expenditures for interest expense as an operating activity but classifies cash expenditures to redeem debt as a financing activity. Explain this apparent paradox.
U.S. GAAP designates cash outflows for interest payments and cash inflows from interest and dividends receivedas operating cash flows. Dividends paid to shareholders are classified as financing cash flows. How are thesecash flows reported under IFRS?
How does AF classify interest paid, interest received, and dividends received in itsstatement of cash flows? What other alternatives, if any, does the company have forthe classification of these items? How are these items classified under U.S. GAAP?

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Financial Reporting, Financial Statement Analysis and Valuation

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