Page 16 - 27. COMPILER QB - IND AS 7

Q11 (March 21 – 4 Marks)

During the financial year 20X1-20X2, Akola Limited have paid various taxes & reproduced the below
mentioned records for your perusal:
- Capital gain tax of Rs. 20 crore on sale of office premises at a sale consideration of Rs. 100 crore.
- Income Tax of Rs. 3 crore on Business profits amounting Rs. 30 crore (assume entire business profit as

cash profit).
- Dividend Distribution Tax of Rs. 2 crore on payment of dividend amounting Rs. 20 crore to its
shareholders.
- Income tax Refund of Rs. 1.5 crore (Refund on taxes paid in earlier periods for business profits).
You need to determine the net cash flow from operating activities, investing activities and financing activities

of Akola Limited as per relevant Ind AS.
SOLUTION
Para 36 of Ind AS 7 inter alia states that when it is practicable to identify the tax cash flow with an

individual transaction that gives rise to cash flows that are classified as investing or financing activities the
tax cash flow is classified as an investing or financing activity as appropriate. When tax cash flows are
allocated over more than one class of activity, the total amount of taxes paid is disclosed.
Accordingly, the transactions are analysed as follows:

Particulars Amount (in crore) Activity
Sale Consideration 100 Investing Activity
Capital Gain Tax (20) Investing Activity
Business profits 30 Operating Activity
Tax on Business profits (3) Operating Activity
Dividend Payment (20) Financing Activity
Dividend Distribution Tax (2) Financing Activity
Income Tax Refund 1.5 Operating Activity
Total Cash flow 86.5

Activity wise Amount (in crore)
Operating Activity 28.5
Investing Activity 80
Financing Activity (22)
Total 86.5

27. 15