Document ID: chunk:federal_register_of_legislation:F2025C00209:front:0:p17
Version: federal_register_of_legislation:F2025C00209
Segment Type: other
Provision Reference: 
Character Range: 48979–52257

1.                     This section sets out the information that is to be presented in a statement of cash flows and how to present it. The statement of cash flows provides information about the changes in cash and cash equivalents of an entity for a reporting period, showing separately changes from operating activities, investing activities and financing activities. [IFRS for SMEs Standard paragraph 7.1]

Cash equivalents
      1.                     Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. They are held to meet short-term cash commitments instead of for investment or other purposes. Consequently, an investment normally qualifies as a cash equivalent only when it has a short maturity of, say, three months or less from the date of acquisition. Bank overdrafts are normally considered financing activities similar to borrowings. However, if they are repayable on demand and form an integral part of an entity's cash management, bank overdrafts are a component of cash and cash equivalents. [IFRS for SMEs Standard paragraph 7.2]

Information to be presented in the statement of cash flows
      1.                     An entity shall present a statement of cash flows that presents cash flows for a reporting period classified by operating activities, investing activities and financing activities. [IFRS for SMEs Standard paragraph 7.3]

Operating activities
      1.                     Operating activities are the principal revenue-producing activities of the entity. Consequently, cash flows from operating activities generally result from the transactions and other events and conditions that enter into the determination of profit or loss. Examples of cash flows from operating activities are:
           1.                     cash receipts from the sale of goods and the rendering of services;
           2.                    cash receipts from royalties, fees, commissions and other revenue;
           3.                     cash payments to suppliers for goods and services;
           4.                    cash payments to and on behalf of employees;
           5.                     cash payments or refunds of income tax, unless they can be specifically identified with financing and investing activities; and
           6.                     cash receipts and payments from investments, loans and other contracts held for dealing or trading purposes, which are similar to inventory acquired specifically for resale.
     Some transactions, such as the sale of an item of plant by a manufacturing entity, may give rise to a gain or loss that is included in profit or loss. However, the cash flows relating to such transactions are cash flows from investing activities. [IFRS for SMEs Standard paragraph 7.4]

Investing activities
      1.                     Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Examples of cash flows arising from investing activities are:
           1.                     cash payments to acquire property, plant and equipment (including self-constructed property, plant and equipment), intangible