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venkata vamsi krishna vedantam (Querist)

07 September 2017 in preparing cash flow statement though indirect method information given receipt of govt grant 12 lakhs depreciation provided 20000 lakhs net increase in working capital 56081 lakhs excluding changes in cash and cash equivalents they do not provide information regarding amortization of such grant now my question is if we modify that there is amortization of such grant[adjustment] 7 lakhs now we deduct 7 lakhs from net profit in order to arrive at operating profit what adjustment to be made to working capital changes considering this new adjustment made by me we have to deduct such 7 lakhs from net increase in working capital 1500 lakhs and we have to deduct working capital increase of 56074 lakhs from operating profit we found to arrive cash flows from operating activities i want to know the reason?
reference of above question ca ipcc old scheme accounting module 1 financial statements of companies chapter cash flow statements star oils limited problem page no. 2.74

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Amol S Joglekar

Amol S Joglekar (Expert)

08 September 2017 why are you getting carried away with amortisation? Is there any hidden hint given in the said numerical?
In the funds flow statement......12 lakh is on sources side.
56081 lakh is on application side.
so to say 56081 -12 = 56069 lakh is the cash inflow
out of which 20,000 lakh is by way of depreciation
so, 36,069 lakh should be profit from operation.

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