![]() ![]() I always use this method of preparing statement of cash flows as it is simple, logical, easy to follow and always gives good results. Solution: Preparing the statement of cash flowsīefore I start with actual steps of making this particular statement of cash flows, let me point you to one of my other articles in which I described all the steps with lots of details. Interest expense for the year 20X4 of CU 1 491 includes the amount of interest paid on the lease liabilities of CU 491.The lease liability as of 31 December 20X4 amounts to CU 13 791 in the statement of financial position, which is the initial lease liability of CU 17 000 less its repayment in 20X4 amounting to CU 3 209.You can see the amortization of ROU asset of CU 4 000 in the statement of PL and OCI, too. ![]() The right-of-use (ROU) asset as of 31 December 20X4 amounts to CU 16 000 in the statement of financial position, which is the initial ROU asset of CU 20 000 less amortization of ROU asset in 20X4 of CU 4 000.Please note the following points in the presented financial statements: To prevent any misunderstanding, “CU” simply means currency unit (instead of mentioning EUR, USD, JPY, what have you). If you take action today and subscribe to the IFRS Kit, you’ll get it at discount! Click here to check it out! Have you already checked out the IFRS Kit ? It’s a full IFRS learning package with more than 40 hours of private video tutorials, more than 140 IFRS case studies solved in Excel, more than 180 pages of handouts and many bonuses included. Your task is to prepare the statement of cash flows for the year ended 31 December 20X4. This transaction has been incorporated to financial statements as shown below. In 20X4, amortization of ROU asset was CU 4 000.the payment of the related interest was CU 491.the repayment of the lease liability was CU 3 209 and.During 20X4, ABC paid the lease payments in total amount of CU 3 700, thereof:.initial direct costs paid in cash are CU 3 000.the present value of the lease liability is CU 17 000 and.Initial right-of-use asset equals to CU 20 000, thereof:.On 1 January 20X4, ABC entered into the lease contract. Hence let me show you on the solved example.Įxample: IFRS 16 Leases in the statement of cash flows (IAS 7) On top of challenges this new treatment brings, many of you asked me to show how to present these new leases in the statement of cash flows. You can read more about it here and there are also detailed explanations with solved excel examples inside the IFRS Kit. So, now, if you have any sort of a lease as a lessee, you have to present right-of-use asset and the lease liability. ![]() Just for the lessees though and with some exceptions (small leases, short-term leases). The reason is that IFRS 16 requires presenting ALL the leases in the same way, regardless whether they were classified as finance or operating. The new lease standard IFRS 16 has been here for a while and yes, it imposed a challenges on all companies who leased their assets under operating leases. ![]()
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