Question

Use the information below to prepare the Cash Flow Statement as set out in IPSAS 2.

Collection of outstanding taxes (PAYE, VAT & Income Tax) from assessments raised on companies in the Fiscal Years 2015 & 2016. The outstanding taxes amounted to $20,000,000.00.

An agreement contract was signed with the government of New Zealand for “Grant” of $150,000,000.00. This amount is to be used solely for educational support in the Budget.

The Government decided not to grant Public Sector employees salary increase and to keep the salary bill fixed based on 2016 final budgeted amount. Throughout the year 2016, Public Sector salary had estimated amount of $90,000,000.00 and actual amount at the end of the year of $100,000,000.00.

The Government entered into an arrangement with the Private Sector (PS) to purchase 1/3 of the Plants and Equipments that the (PS) did not use. The cost of these equipments at $25,000,000.00. The Private Sector realizing that it disposed of more equipment than it should have, repurchased some of the equipments from the Government at a reduce cost of 50% of the cost for which they were previously sold .

Five percent (5%) of Australia’s annual budget is funded by foreign currency securities. For the year ending 2017, the Government purchased these securities at a cost of $12,000,000.00.

The proceeds from the sale of investments amounted to $10,500,000.00

It was decided by the Government to borrow an additional $5,000,000.00 from the New Zealand’s Government, and a further $10,000,000.00 from other Commonwealth countries at concessionary rate of interest of 3%. Before the end of the year, $7,500,000.00 of the loan from New Zealand was repaid without attracting interest.

Cash and Cash Equivalents at the end of 2016 was $35,000,000.00. The policy under the Accrual Accounting Basis is that the closing balances of cash for one year, is the opening balance for the following year.

Answer 1

Cash Flow Statement

Grants from New Zealand Government 150,000,000.00

Salary to Govt Employees (Deduct) - 100,000,000.00

Purchase of Equipment (Deduct) -12,500,000.00

Outstanding Tax (Add) 20,000,000.00

Securities Purchased from Austrailia Govt (Ded)- 12,000,000.00

Investments Sold (Add) 10,500,000.00

Additional Borrowings (Add) 15,000,000.00

Loan Repaid (Deduct ) - 7,500,000.00

Interest @3% from Common Wealth Countries (Ded) - 3,00,000.00

Opening Cash Balance (Add) 35,000,000.00

Closing Cash Balance 98,200,000