Page 110 - Corporate Finance PDF Final new link

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110 Corporate Finance BRILLIANT’S

Many investing and financing activities do ~hwV gr BÝdopñQ>¨J Ed§ \$m`Z|{gJ EpŠQ>{dQ>rO H$m
not have a direct impact on current cash flows H$a§Q> H¡$e âbmoO na àË`j à^md Zht n‹S>Vm ^bo hr
although they do affect the capital and asset do BÝQ>aàmBg H$s H¡${nQ>b d AgoQ> ñQ´>ŠMa H$mo n«^m{dV
structure of an enterprise. The exclusion of non-
cash transactions from the cash flow statement H$aVo hm|Ÿ& AV: Zm°Z-H¡$e Q´>m§OoŠeÝg H$mo H¡$e âbmo
is consistent with the objective of cash flow ñQ>oQ>_|Q> _| gpå_{cV Zht H$aZm Mm{h`o Š`m|{H$ CZ_| H¡$e
statement as these items do not involve cash
âbmo Zht hmoVmŸ& Zm°Z-H¡$e Q´>m§OoŠeÝg Ho$ CXmhaU
flows in the current period. Example of non-
cash transactions are: {ZåZ{c{IV h¢:
(a) the acquisition of assets by assuming (a) AgoQ> H$m EpŠd{OeZ `h OmZVo hþE {H$ dh
directly related liabilities; bm`{~{bQ>rO go grYo Vm¡a na gå~§{YV h¡Ÿ&
(b) the acquisition of an enterprise by means (b) eo`g© H$mo Bí`y H$aHo$ {H$gr B§Q>aàmBg H$m EpŠd{OeZ;
of issue of shares; and Ed§
(c) the conversion of debt to equity. (c) S>oãQ> H$mo BpŠdQ>r _| n[ad{V©V H$aZmŸ&
7. Other Disclosures: An enterprise should 7. AÝ` {S>ñŠbmoOa: {H$gr B§Q>aàmBg H$mo _¡ZoO_|Q>
disclose, together with comments by H$s {Q>ßnUr Ho$ gmW-gmW `h ^r AcJ go àH$Q> H$aZm
management, the amount of significant cash
and cash equivalent balances held by the Mm{h`o {H$ _hËdnyU© H¡$e Ed§ H¡$e BpŠddoboÝQ> H$m {H$VZm
enterprise that are not available for use by it. ^mJ CgHo$ à`moJ Ho$ {c`o CncãY Zht h¡Ÿ&
There are various circumstances in which Eogr ~hþV gr n[apñW{V`m§ hmo gH$Vr h¢ {OZ_| H¡$e
cash and cash equivalent balances held by `m H¡$e BpŠddoboÝQ> H$m H$moB© ^mJ B§Q>aàmBg Ho$ Cn`moJ
enterprise are not available for use by it.
Example includes cash and cash equivalent Ho$ {c`o CncãY Z hmoŸ& CXmhaU Ho$ {c`o, {H$gr
balance held by a branch of the enterprise that B§Q>aàmBg H$s ~«m§M Ho$ nmg aIm hþAm H¡$e VWm BpŠdd¡b§oQ>
operates in a country where exchange controls Omo {H$ Eogo Xoe _| H$m`© H$aVr h¡ Ohm§ Ho$ EŠgM|O H$ÝQ´>mob
or other legal restrictions apply as a result of
AWdm AÝ` d¡Ym{ZH$ à{V~ÝY CŠV H¡$e na B§Q>aàmBg
which the balances are not available for use by
the enterprise. Ho$ à`moJ Ho$ {c`o à{V~ÝY cJmVo h¢Ÿ&
Additional information may be relevant A{V[aŠV gyMZmE§ Cn`moJH$Vm© Ho$ {c`o B§Q>aàmBg
to users in understanding the financial position H$s \$m`ZopÝe`b nmo{OeZ d {bpŠd{S>Q>r H$mo g_PZo _|
and liquidity of an enterprise. Disclosure of this AË`§V ghm`H$ hmoVr h¢Ÿ& AV: Bg àH$ma H$s gyMZmAm|
information, together with comments by H$m _¡ZoO_|Q> H$s {Q>ßn{U`m| g{hV {S>ñŠbmoOa H$mo àmoËgm{hV
management, is encouraged and may include: {H$`m OmZm Mm{h`o VWm Bg_| hmo gH$Vm h¡:
(a) the amount of unused borrowing facilities (a) Cn`moJ Z H$s JB© ~m°amoB§J \¡${g{cQ>rO H$s _mÌm Omo
that may be available for future operating ^{dî` H$s Am°naoqQ>J EpŠQ>{dQ>rO Ed§ BZ gw{dYmAm|
activities and to settle capital
commitments, indicating any restrictions Ho$ Cn`moJ na Hw$N> à{V~§Y Xem©Vo hþE H¡${nQ>b
on the use of these facilities; and dMZ~ÕVm {ZYm©[aV H$aZo Ho$ {cE CncãY h¡Ÿ&
(b) the aggregate amount of cash flows that (b) do H¡$e âbmo {OÝh| Am°naoqQ>J úm_Vm H$mo ~ZmE aIZo
represent increase in operating capacity H$s Amdí`H$Vm hmoVr h¡, go {^Þ H¡$e âbmo H$s