Hi Guys.. in Q&A part 3, Q3.23 when producing cashflow statement , under "Cashflow from financing activities", why don't we include the repayments for the loans, ie Convertible unsecured loan 2014, 10% debenture 2016 and so on..just right under the non current liabilities on the balance sheet? as the course notes on Ch08, p25 clearing says that Financing activities should include " cashflows arising from the repayment of loans and from fresh borrrowing and the issue of share". Is there a conflict to this? Thanks guys...!!
Hi No, there's no conflict here I think it just feels a little odd because the interest payments on the loans and the repayment of the capital at the end of the loan appear in different sections of a cashflow statement. The financing activities part of the cashflow statement contains repayment of the loan amount (ie the full value of the loan at the end of its term). The interest payments on the loans during their term appear in the operating activities part of the cashflow statement. (The 44,000 in the solution to this question.) Hope this helps Lynn
