CFAI EOC Integrating Financial Statements q 15 understand, financing, remember

HuskyGrad2010

Please Help


I understand in this question that the reason they have not added back interest expense to the net income. However they said that Bickchip reports under IFRS.



First q

Where in the question does it state that Bickchip reports under IFRS.


Second q

R they saying that once u report under IFRS then interest is classified as a financing activity and hence it is not added back to CFO. This might have been in L1 some where but I did that in 2k8 and really cannot remember. Please verify/clarify

Otabek

Okay , well if it is reporting under IFRS, and under IFRS interest can be categorised under CFO or CFF, why then could cash from interest not be added back to NI to arrive at EBIT

giorgio10

First q

Where in the question does it state that Bickchip reports under IFRS.

they said this in the answer only. but if you looked at the smaller (microscopic font foot note) at the bottom of the table - they said (includes Interest expense)...

WHICH I HAD MISSED.

Interest expense may be classified either as CFO or CFF under IFRS, only as CFO under GAAP. Once it is classified - it goes only into that portion of Cash flows, in principle.

CP