ACCA FR Syllabus D. Preparation Of Financial Statements - Cashflow statements - Step 5 - Shares - Notes ^{9 / 9}

So in steps 1-3 we looked at how we got the cash from the income statement and into the statement of cash flows.

In step 4 we looked at getting the cash flows from PPE.

So now in our final step we look at getting cash from what’s left in the SFP… starting with shares.

Share issues

Again let’s look at this by illustration and we are using virtually the same technique as step 3 as you will see..

Solution

Share Proceeds goes to the financing activities section of the cashflow statement.

Effect of Bonus Issue

If there’s been a bonus issue, you need to be careful.
You need to look at where the debit went - share premium or retained earnings:

If share premium - ignore the bonus issue and the answer calculated above is still correct

If Retained earnings - reduce the cash by the amount of the bonus issue

See the quizzes for examples of this.