Repeat Question 14.3, this time using the direct method prepare a cash flow statement following the requirements of IAS 7.

DATA FROM Question 14.3

Prepare a cash flow statement for Lee Ltd for the year ended 31 December 20X4 as required under FRS 1 using the direct method, together with note 1 to the statement. The profit and loss account, balance sheet and cash account for Lee Ltd for the year 20X4 are given below. (Do not attempt to provide the reconciliation of net cash flow to net debt.)

Data from IAS 7

IAS 7 seeks similar information to that required by FRS 1, but its requirements are considerably less detailed. In place of nine cash flow category headings, IAS 7 has only three:

1. Operating activities;

2. Investing activities; and

3. Financing activities.

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Sales Less Cost of goods sold Less Expenses Wages Other costs Profit and Loss Account for the year ending 31 December 20X4 Depreciation Interest Profit for the year Dividend Retained profit 4 2,000 600 500 100 £ 6,500 (3,000) 3,500 (3,200) 300 (50) 250