The summarised statement of comprehensive income of Scharp Ltd for the year to 30 June 2018 is shown below, together with the company’s statement of financial position at that date (with comparatives for the previous year).
Statement of comprehensive income for the year to 30 June 2018.
£
Operating profit……………………. 170,200
Investment income……………………. 7,100
Interest payable………………………. (6,120)
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Profit before taxation…………….. 171,180
Taxation………………………………….. 37,870
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Profit for the year…………………… 133,310
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Other comprehensive income was £nil.
Statement of financial position at 30 June 2018.
(i) There were no disposals of non-current assets during the year to 30 June 2018.
(ii) A of £85,000 was paid during the year.
Required:
(a) Prepare a statement of cash flows for the year to 30 June 2018 in accordance with the requirements of IAS7 (using the indirect method).
(b) Explain why the information provided in the statement of comprehensive income and in the statements of financial position is insufficient to allow use of the direct method in this case.
(c) Comment briefly on the significance of the information provided by the company’s statement of cash flows.
