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In regards to the typical classification of interest and dividends using U.S. GAAP and IFRS, which...

In regards to the typical classification of interest and dividends using U.S. GAAP and IFRS, which of the following statements is correct:

a.Under IFRS, interest received is an operating activity.

b.Under U.S. GAAP, dividends received is an investing activity.

c.Under IFRS, interest paid is a financing activity.

d.Under U.S. GAAP, dividends paid is an operating activity.

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Answer #1

Answer is a. Under IFRS, interest received is an operating activity.

Under IFRS Interest received may be classified as cash flows from either operating or investing activities but not financing activity. Interest received will be classified under operating if entity is a financial institution.

Interest paid may be classified as cash flows from either operating or financing activities. Interest paid will be classified under operating if entity is a financial institution.

So as per above both option a and c are correct if entity is other entity and not financial institution. But if it is a financial institution then only option a is correct.

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