Ad Free CAclubindia and Daily Updates on your Mobile. Subscribe Now!

cash flow

Suresh Pai S (Tax Consultant) (1029 Points)

29 March 2017

Where will you classify the following in cash flow statement?
1. Unsecured loans given to subsidiaries and interest on loans given to subsidiaries.

Why?

Reply
Follow
Share

7 Replies

shilpi (student) (780 Points)
Replied 29 March 2017

Financing activities -Receiving /Paying loans related with Financial structure of the enterprise.

Upgrade to CAclubindia Pro. Subscribe Now!

CA Anil Jain (Chartered Accountant) (105 Points)
Replied 29 March 2017

It should be treated just like an investment made in subsidiaries or by subsidiaries and classified under investing/financing activities. You can see many like cash flow statements here:

https://www.google.co.in/?q=%22loan+to+subsidiaries%22+investing+activities

2 Like

Suresh Pai S (Tax Consultant) (1029 Points)
Replied 30 March 2017

To me, classifying it under investing activities seems more appropriate because as per AS 3 para 15 point (e) is classifying advances and loans paid to third parties under investing activities. I can hardly differentiate between an advance paid to a third party and to a subsidiary. Both are done with a business intent.

@ shilpi. It doesn't seem to be appropriate to classify the same under financing activities because the composition of the capital or borrowings are unchanged.

What do you think?