Page 80 - IC26 LIFE INSURANCE FINANCE

5] Cash payments or refunds of Income Tax unless they can be specifically identified with financing or

investing activities

6] Cash receipts and payments to future contracts, forward contracts when the contracts are held for

trading purposes.

Cash from operating activities can be disclosed either by DIRECT METHOD OR BY INDIRECT METHOD.

Investing Activities are the acquisition and disposal of long-term assets and other investments not included

in cash equivalents.

Example:

1] Cash payments/receipts to acquire/sale of fixed assets including intangible assets

2] Cash payments to acquire shares or interest in joint ventures (other than the cases where instruments are

considered as cash equivalents)

3] Cash advances and loans made to third parties (Loan sanctioned by a financial enterprise is operating

activity)

4] Dividends and Interest received

5] Cash flows from acquisitions and disposal of subsidiaries

Financing Activities are activities that result in changes in the size and composition of the owners’ capital

(including preference share capital in the case of a company) and borrowing of the enterprise.

Example:

1] Cash proceeds from issue of shares and debentures

2] Buy back of shares

3] Redemption of Preference shares or debentures

4] Cash repayments of amount borrowed.

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