CHAPTER 23 Statement of Cash Flows ASSIGNMENT CLASSIFICATION TABLE BY TOPIC Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1 2 5 6 1 2 10 16 1 3 4 5 1 Format objectives purpose and source of statement 1 2 7 8 12 2 Classifying investing financing and operating activities 3 4 5 6 16 17 19 methods of preparing operating activities 4 Statement of cash flows 11 13 14 direct method 5 Statement of cash flows indirect method 10 13 15 16 1 2 3 6 7 8 12 4 5 9 10 11 8 8 3 Direct vs indirect 9 20 3 4 5 2 4 5 7 9 12 13 3 4 6 7 8 3 6 8 11 14 15 16 17 18 1 2 5 6 7 8 9 6 Preparing schedule 18 12 5 7 8 9 5 of noncash investing and financing activities 7 Worksheet adjustments 21 13 19 20 21 Copyright 2011 John Wiley Sons Inc Kieso Intermediate Accounting 14 e Solutions Manual For Instructor Use Only 23 1 ASSIGNMENT CLASSIFICATION TABLE BY LEARNING OBJECTIVE Learning Objectives 1 Describe the purpose of the statement of cash flows 2 Identify the major classifications of cash flows Brief Exercises Exercises Problems 1 2 10 16 3 Differentiate between net income and net cash flows from operating activities 4 5 9 10 11 2 3 4 5 6 7 8 16 4 Contrast the direct and indirect methods 4 5 6 7 9 of calculating net cash flow from operating activities 3 4 5 6 7 8 5 Determine net cash flows from investing 1 2 16 and financing activities 6 Prepare a statement of cash flows 7 Identify sources of information for a statement of cash flows 9 11 12 13 14 15 17 18 1 2 3 4 5 6 7 8 9 3 8 6 7 6 7 1 2 4 5 8 9 1 2 4 5 6 7 8 9 8 Discuss special problems in preparing 12 10 18 a statement of cash flows 9 Explain the use of a worksheet in 13 19 20 21 preparing a statement of cash flows 23 2 Copyright 2011 John Wiley Sons Inc Kieso Intermediate Accounting 14 e Solutions Manual For Instructor Use Only ASSIGNMENT CHARACTERISTICS TABLE Description Time minutes Item E23 1 E23 2 E23 3 E23 4 E23 5 E23 6 E23 7 E23 8 E23 9 E23 10 E23 11 E23 12 E23 13 E23 14 E23 15 E23 16 E23 17 E23 18 E23 19 E23 20 E23 21 P23 1 P23 2 P23 3 P23 4 P23 5 P23 6 Classification of transactions Statement presentation of transactions indirect method Preparation of operating activities section indirect method periodic inventory Preparation of operating activities section direct method Preparation of operating activities section direct method Preparation of operating activities section indirect method Computation of operating activities direct method Schedule of net cash flow from operating activities indirect method SCF direct method Classification of transactions SCF indirect method SCF direct method SCF direct method SCF indirect method SCF indirect method Cash provided by operating investing and financing activities SCF indirect method and balance sheet Partial SCF indirect method Worksheet analysis of selected accounts Worksheet analysis of selected transactions Worksheet preparation SCF indirect method SCF indirect method SCF direct method SCF direct method SCF indirect method SCF indirect method and net cash flow from operating activities direct method financial statements P23 8 P23 9 CA23 1 CA23 2 CA23 3 CA23 4 CA23 5 CA23 6 Indirect SCF SCF direct and indirect methods Analysis of improper SCF SCF theory and analysis of improper SCF SCF theory and analysis of transactions Analysis of transactions effect on SCF Purpose and elements of SCF Cash flow reporting ethics Level of Difficulty Simple Moderate Simple Simple Simple Simple Simple Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Complex Moderate Complex Moderate Moderate Moderate Moderate Moderate Moderate Moderate Complex Moderate 10 15 20 30 15 25 20 30 20 30 15 20 15 20 20 30 20 30 25 35 30 35 20 30 30 40 30 40 25 35 30 40 30 40 25 30 20 25 20 25 45 55 40 45 50 60 50 60 45 60 50 65 40 50 30 40 30 40 30 35 30 35 30 35 20 30 30 40 20 30 P23 7 SCF direct and indirect methods from comparative Moderate 30 40 Copyright 2011 John Wiley Sons Inc Kieso Intermediate Accounting 14 e Solutions Manual For Instructor Use Only 23 3 b c SOLUTIONS TO CODIFICATION EXERCISES CE23 1 Master Glossary a Cash equivalents are short term highly liquid investments that have both of the following characteristics 1 2 Readily convertible to known amounts of cash So near their maturity that they present insignificant risk of changes in value because of changes in interest rates Generally only investments with original maturities of three months or less qualify under that definition Original maturity means original maturity to the entity holding the investment For example both a three month U S Treasury bill and a three year Treasury note purchased three months from maturity qualify as cash equivalents However a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months Examples of items commonly considered to be cash equivalents are Treasury bills commercial paper money market funds and federal funds sold for an entity with banking operations Financing activities include obtaining resources from owners and providing them with a return on and a return of their investment receiving restricted resources that by donor stipulation must be used for long term purposes borrowing money and repaying amounts borrowed or otherwise settling the obligation and obtaining and paying for other resources obtained from creditors on long term credit Investing activities include making and collecting loans and acquiring and disposing of debt or equity instruments and property plant and equipment and other productive assets that is assets held for or used in the production of goods or services by the entity other than materials that are part of the entity s inventory Investing activities exclude acquiring and disposing of certain loans or other debt or equity instruments that are acquired specifically for resale as discussed in paragraphs 230 10 45 12 and 230 10 45 21 d Operating activities include all transactions and other events that are not defined as investing or financing activities see paragraphs 230 10 45 12 through 45 15 Operating activities generally involve producing and delivering goods and providing services Cash flows from operating activities are generally the cash effects of transactions and other events that enter into the determination of net income CE23 2 According to FASB ASC 230 10 45 14 Statement of Cash Flow Other Presentation Matters Cash Flows from