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27. Cash flows denominated in a
foreign currency are reported in a manner consistent with IAS
21, accounting for the effects of changes in foreign exchange
rates. This permits the use of an exchange rate that
approximates the actual rate. For example, a weighted average
exchange rate for a period may be used for recording foreign
currency transactions or the translation of the cash flows of
a foreign subsidiary. However, IAS 21 does not permit use of
the exchange rate at the balance sheet date when translating
the cash flows of a foreign subsidiary. 28.
Unrealised gains and losses arising from changes in foreign
currency exchange rates are not cash flows. However, the
effect of exchange rate changes on cash and cash equivalents
held or due in a foreign currency is reported in the cash flow
statement in order to reconcile cash and cash equivalents at
the beginning and the end of the period. This amount is
presented separately from cash flows from operating, investing
and financing activities and includes the differences, if any,
had those cash flows been reported at end of period exchange
rates.
Extraordinary items
29. [deleted] 30. [deleted]
Interest and dividends 31.
Cash flows from interest and dividends received and paid
should each be disclosed separately. Each should be classified
in a consistent manner from period to period as either
operating, investing or financing activities.
32. The total amount of interest paid during a period is
disclosed in the cash flow statement whether it has been
recognised as an expense in the income statement or
capitalised in accordance with the allowed alternative
treatment in IAS 23, borrowing costs.
33. Interest paid and interest and dividends received are
usually classified as operating cash flows for a financial
institution. However, there is no consensus on the
classification of these cash flows for other enterprises.
Interest paid and interest and dividends received may be
classified as operating cash flows because they enter into the
determination of net profit or loss. Alternatively, interest
paid and interest and dividends received may be classified as
financing cash flows and investing cash flows respectively,
because they are costs of obtaining financial resources or
returns on investments. 34.
Dividends paid may be classified as a financing cash flow
because they are a cost of obtaining financial resources.
Alternatively, dividends paid may be classified as a component
of cash flows from operating activities in order to assist
users to determine the ability of an enterprise to pay
dividends out of operating cash flows.
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