Exercises Lesson 7 0809 Solucionados

1
DEPARTAMENTO DE CONTABILIDAD Y ECONOMA FINANCIERA

ESCUELA UNIVERSITARIA DE ESTUDIOS EMPRESARIALES

FINANCIAL ACCOUNTING

(DIPLOMATURA EN CIENCIAS EMPRESARIALES, 2 CURSO, GRUPO 5)

2008-2009

EXERCISES LESSON 7
CASH FLOW STATEMENT

2
CASH FLOW STATEMENT: LESSON 7

EXERCISE 1 LESSON 7

Company ABC, created at the beginning of 2007, had at the beginning of 2008 a working capital
composed exclusively by cash. The cash account had a balance of 4.000 . During 2008 the
operations of the company have been the following:

The services rendered during the year amount 600 received in cash. Personnel expenses
and other operating expenses of 400 have been paid in cash during the year.
The fixed assets depreciation expense for the year amounts 110 .
The 1
st
of October the company obtained a long-term loan of 4.000 from the CHASE
MANHATTAN BANK, which will be paid back at the end of 2012. The annual interest rate
is 3% on the total amount, payable at the beginning of each quarter.
At the end of the year the company has bought new fixed assets with a cost of 12.000 :
8.000 paid in cash and the other 4.000 will be paid in 24 months.
The tax rate is 30%.

REQUIRED: Prepare the Cash Flow Statement for year 2008.

EXERCISE 2 LESSON 7

Company ABC, created at the beginning of 2007, published the following financial statements at the end
of 2008:

ASSETS 2008 2007 LIABILITIES 2008 2007
A) NON-CURRENT ASSETS A) EQUITY
II. Tangible fixed assets. 21,890 10,000 A-1) Shareholders' equity.
B) CURRENT ASSETS I. Capital. 14,000 14,000
III. Trade accounts receivables and other r. VII. Income for the year. 42 0
1. Trade accounts receivables for sale and services. 348 0 B) NON-CURRENT LIABILITIES
6. Other receivables from Public Authorities 1,824 0 II. Long-termdebt.
VII. Cash and cash equivalents. 2. Long-term debt payable to credit institutions. 4,000 0
1. Cash. (1,872) 4,000 5. Other financial liabilities 4,000 0
TOTAL ASSETS 22,190 14,000 C) CURRENT LIABILITIES
III. Short-termdebt.
2. Short-term debt payable to credit institutions. 30 0
V. Trade accounts payables and other p.
4. Salary payable 100 0
5. Liability for current tax. 18 0
TOTAL LIABILITIES 22,190 14,000

3

2008
A) CONTINUING OPERATIONS
1. Net turnover. 600
6. Personnel expenses. (400)
8. Fixed assets depreciation expense. (110)
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 90
13. Financial expenses. (30)
A.2) FINANCIAL INCOME (12+13+14+15+16) (30)
A.3) INCOME BEFORE TAXES (A.1+A.2) 60
17. Income tax. (18)
A.4) INCOME FROMCONTINUING OPERATIONS (A.3+17) 42
A.5) INCOME FOR THE YEAR 42

During 2008 the operations of the company have been the following:
The services rendered during the year amount 600 (50% of these revenues have been collected in
cash during 2008). Personnel expenses were 400 (75% of these expenses have been paid in cash
during 2008).
The fixed assets depreciation expense for the year amounts 110 .
The 1
st
of October the company obtained a long-term loan of 4.000 from the CHASE
MANHATTAN BANK, which will be paid back at the end of 2012. The annual interest rate is 3% on
the total amount, payable at the end of each semester.
At the end of the year the company has bought new fixed assets with a cost of 12.000 : 8.000 and the
V.A.T. paid in cash and the other 4.000 will be paid in 24 months.
The tax rate is 30%, payable in June of the next year.
V.A.T. is 16%.


SOLUTION
JOURNAL 2008

348
348
Cash
Accounts receivables
to Services rendered
V.A.T. collected
600
96
400 Wages and salaries to Cash
Salary payable
300
100
110 Tangible fixed assets depreciation
expense
to Accumulated depreciation of
tangible fixed assets
110
4000 Cash to Long-term loan payable to
financial institutions
4000
30 Interest expense to Interest payable 30
12000
1920
Tangible fixed assets
V.A.T. paid
to Cash
Long-term debt with suppliers of
fixed assets
9920
4000

600 Services rendered to Operating income 600
510 Operating income to Wages and salaries
Tangible fixed assets
depreciation expense
400
110
30 Financial income to Interest expense 30
90 Operating income to Financial income
Income before taxes
30
60
18 Income tax expense to Payable to public authorities 18
4
(Income tax)
60 Income before taxes to Income tax expense
INCOME FOR THE YEAR
18
42
96
1824
V.A.T. collected
Receivable from public authorities
(V.A.T.)
to V.A.T. paid 1920

A) CASH FLOWS FROMOPERATING ACTIVITIES
200X
1. Income before taxes
60
2. Adjustments to income

a) Depreciation of fixed assets (+). 110
b) Value corrections for impairment (+/-).
c) Change in provisions (+/-).
d) Transfer of grants (-).
e) Income from disposal of non-current assets (+/-).
f) Income from disposal of financial instruments (+/-).
g) Financial revenues (-).

h) Financial expenses (+).
30
i) Exchange differences (+/-).

j) Change in fair value of financial instruments (+/-).
k) Other revenues and expenses (-/+).
3. Changes in working capital

a) Inventory (+/-).

b) Accounts receivables and other receivables (+/-).
-2172
c) Other current assets (+/-).

d) Accounts payables and other payables (+/-).
100
e) Other current liabilities (+/-).

f) Other non-current assets and liabilities (+/-).

4. Other cash flows fromoperating activities

a) Cash payments of interests (-).

b) Cash receipts of dividends (+).

c) Cash receipts of interests (+).

d) Cash receipts (payments) for income taxes (+/-).

e) Other cash payments (receipts) (-/+)

5. Cash flows fromoperating activities (+/-1+/-2+/-3+/-4)
-1872
B) CASH FLOWS FROMINVESTMENT ACTIVITIES

6. Cash payments for investments (-)

a) Subsidiaries and associated companies.

b) Intangible assets.

c) Tangible fixed assets.
-8000
d) Investment property.

e) Other financial assets.

f) Non-current assets held for sale.

g) Other assets.

7. Cash receipts fromdisinvestments (+)



5




g) Other assets.

8. Cash flows frominvestment activities (7-6)
-8000
C) CASH FLOWS FROMFINANCING ACTIVITIES

9. Cash receipts and payments for equity instruments

a) Issuing of equity instruments (+).
b) Amortization of equity instruments (-).
c) Acquisition of the own equity instruments (-).
d) Disposal of the own equity instruments (+).
e) Grants, donations and legacies received (+).
10. Cash receipts and payments for debt instruments

a) Issuing of
1. Debentures and other negotiable securities (+).
2. Long term debt payable to credit institutions (+). 4000
3. Long term debt payable to subsidiaries and associated companies (+).
4. Other debt (+).
b) Refunds and amortization of
1. Debentures and other negotiable securities (-).
2. Long term debt payable to credit institutions (-).
3. Long term debt payable to subsidiaries and associated companies (-).
4. Other debt (-).
11. Cash payments of dividends and remuneration of other equity instruments.

a) Dividends (-).
b) Remuneration of other equity instruments (-).
12. Cash flows fromfinancing activities (+/-9+/-10-11)
4000
D) Effect of changes in exchange rates

E) NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS
-5872
Cash and equivalents at the beginning of the period
4000
Cash and equivalents at the end of the period
-1872

EXERCISE 3 LESSON 7

Classify the following operations by type of activity according to the model of the Cash Flow
Statement established in the P.G.C. Indicate also the amount of the cash collection or payment.

Operations Investing Financing No effect
Cash payment to a supplier for a purchase of
inventory made in the previous year: 1,000

Cash receipt from the shareholders to compensate
losses accumulated in previous years: 20,000

Cash receipt of a loan received from a financial
institution: 100,000

Cash payment of interests generated by a debt with
financial institutions: 3,400

Cash receipt from customers for sales made this year
and in the previous year: 8,000

6
Cash payment to the City Council for the local taxes:
500

Cash payment of the wages to the employees: 40,000
Cash payment the Tax Agency for the IRPF
withholdings to the employees: 4,200

Cash payment for the acquisition of an investment in
shares that are classified as held for trading: 3,000

Purchase of a machinery by 20,000. 30% of this
amount paid in 18 months time.

Cash payment to the Tax Agency for the income tax
of the previous year: 38,000

Increase in the fair value of the held for trading
portfolio: 1,100

Sale in cash by 26,000 of a land that had a book
value of 12,000

Cash payment of the rent of a building for November
and December of this year and January of next year:
570

Cash collection of a subvention from the City
Council to compensate operating losses: 40,000

Cash collection of a grant, obtained at the end of the
previous year, to finance the purchase of a new
machinery: 87,000

Transfer to income for the year of a portion of a
capital grant: 8,700

Cash payment of a fine of 45,200 for environmental
damage. The company had registered a long-term
provision of 46,000.

Increase in capital stock of 20,000 with a share
premium of 1,000. Uncalled subscribed capital
receivable is 10,000.

Income for the year is 15,000 and 10,000 are
distributed to dividends. The previous year the
company had paid 1,000 as dividends paid in
advance.

7
SOLUTION

Operations Investing Financing No
effect
Cash payment to a supplier for a purchase of
inventory made in the previous year: 1,000
(1,000)
Cash receipt from the shareholders to compensate
losses accumulated in previous years: 20,000
20,000
Cash receipt of a loan received from a financial
institution: 100,000
100,000
Cash payment of interests generated by a debt with
financial institutions: 3,400
(3,400)
Cash receipt from customers for sales made this
year and in the previous year: 8,000
8,000
Cash payment to the City Council for the local
taxes: 500
(500)
Cash payment of the wages to the employees:
40,000
(40,000)
Cash payment the Tax Agency for the IRPF
withholdings to the employees: 4,200
(4,200)
Cash payment for the acquisition of an investment
in shares that are classified as held for trading:
3,000
(3,000)
Purchase of a machinery by 20,000. 30% of this
amount paid in 18 months time.
(14,000)
Cash payment to the Tax Agency for the income
tax of the previous year: 38,000
(38,000)
Increase in the fair value of the held for trading
portfolio: 1,100
XXX
Sale in cash by 26,000 of a land that had a book
value of 12,000
26,000
Cash payment of the rent of a building for
November and December of this year and January
of next year: 570
(570)
Cash collection of a subvention from the City
Council to compensate operating losses: 40,000
40,000
Cash collection of a grant, obtained at the end of
the previous year, to finance the purchase of a new
machinery: 87,000
87,000
Transfer to income for the year of a portion of a
capital grant: 8,700
XXX
Cash payment of a fine of 45,200 for
environmental damage. The company had
registered a long-term provision of 46,000.
(45,200)
Increase in capital stock of 20,000 with a share
premium of 1,000. Uncalled subscribed capital
receivable is 10,000.
11,000
Income for the year is 15,000 and 10,000 are
distributed to dividends. The previous year the
company had paid 1,000 as dividends paid in
advance.
(9,000)

8
EXERCISE 4 LESSON 7

Company ABC, Ltd. has disclosed the following financial statements at the end of year 2009.

Assets 2009 2008 Equity and Liabilities 2009 2008
Constructions 1,800 2,000 Capital stock 5,550 5,000
Machinery 4,950 5,300 Legal reserves 850 700
Long-term receivable from buyers of
fixed assets
50 - Income for the year 506 400
Inventories (finished products) 1,500 2,200 Dividends paid in advance - 200
Accounts receivable 2,700 2,250 Capital grants 280 -
Receivable from public authorities
(capital grants)
200 -
Long-term debt payable to
credit institutions
Deferred tax liability

1,024
120
1,324
-
Cash 650 710
Short-term debt payable to
credit institutions
700 1,220
Accounts payable for purchases 2,250 2,950
Accounts payable for services 570 750
Liability for current tax 200 116
Total 11,850 12,460 Total 11,850 12,460

2009
1. Net turnover. 30,176
a) Sales. 30,176
4. Procurements. (20,700)
a) Consumption of goods for sale. (20,700)
7. Other operating expenses. (7,670)
a) Outside services. (7,620)
c) Losses, impairment and change in provisions for trade operations. (50)
8. Fixed assets depreciation expense. (1,200)
11. Impairment and income from disposal of non-current assets. 50
b) Income from disposals and others. 50
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 656
12. Financial revenues. 50
b) From marketable securities and other financial instruments. 50
A.2) FINANCIAL INCOME (12+13+14+15+16) 50
A.3) INCOME BEFORE TAXES (A.1+A.2) 706
17. Income tax. (200)
A.4) INCOME FROM CONTINUING OPERATIONS (A.3+17) 506
A.5) INCOME FOR THE YEAR (A.4+18) 506

COMPLEMENTARY INFORMATION:
1.- During 2009 the company made the distribution of 2008 net income. A portion of this income was
distributed as reserves and another was paid as dividends in 2009. Moreover, the company made a
payment of interim dividends at the beginning of June.
2.- A machinery was sold during 2009 for 100 m.u. Its adquisition price was 250 m.u. and the
accumulated depreciation was 200 m.u. A new machinery has also been bought with a cost of 700 m.u.

REQUIRED: Prepare the Cash Flow Statement for 2009.
9
SOLUTION
A) CASH FLOWS FROM OPERATING ACTIVITIES
2009
706

a) Depreciation of fixed assets (+). 1.200
e) Income from disposal of non-current assets (+/-). - 50
- 50

a) Inventory (+/-).
700
- 450
- 880
4. Other cash flows from operating activities

50
- 116
5. Cash flows from operating activities (+/-1+/-2+/-3+/-4)
1.110
B) CASH FLOWS FROM INVESTMENT ACTIVITIES


-700
7. Cash receipts from disinvestments (+)

50
8. Cash flows from investment activities (7-6)
-650
C) CASH FLOWS FROM FINANCING ACTIVITIES


a) Issuing of equity instruments (+). 550
e) Grants, donations and legacies received (+). 200

4. Other debt (-). -820

a) Dividends (-). -450
12. Cash flows from financing activities (+/-9+/-10-11)
-520

-60
710
650

10
EXERCISE 5 LESSON 7

Company XYZ, Ltd. has published the following financial statements in year 2009:

Assets 2009 2008 Equity and Liabilities 2009 2008
Tangible fixed assets 23,350 23,300 Capital stock 35,000 35,000
Long term financial investments 15,100 15,500 Legal reserves 9,650 9,000
Inventories 11,850 10,900 Income for the year 1,950 1,300
Accounts receivable 9,200 8,600 Capital subventions 560 630
Cash 500 700 Long-term debt payable to credit institut. 2,400 -

Deferred tax liability
Short-term debt payable to credit institut.
240
600
270
800
Interest payable 75 -
Accounts payable for purchases 8,475 11,300
Liability for current tax 1,050 700
Total 60,000 59,000 Total 60,000 59,000

2009
a) Sales. 20,150
4. Procurements. -11,850
a) Consumption of goods for sale. - 11,850
6. Personnel expenses. - 1,800
a) Wages, salaries and similar expenses. - 1,800
7. Other operating expenses. - 800
a) Outside services. - 800
8. Fixed assets depreciation expense. - 2,100
9. Transfer of grants of non-financial non-current assets and others. 100
11. Impairment and income from disposal of non-current assets. - 250
b) Income from disposals and others. - 250
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 3,450
a) From holdings in equity instruments. 50
13. Financial expenses. - 100
b) Of third parties. - 100
16. Impairment and income from disposal of financial instruments. - 400
a) Impairment and losses. - 400
A.2) FINANCIAL INCOME (12+13+14+15+16) -450
A.3) INCOME BEFORE TAXES (A.1+A.2) 3,000
17. Income tax. - 1,050
A.4) INCOME FROM CONTINUING OPERATIONS (A.3+17) 1,950
A.5) INCOME FOR THE YEAR (A.4+18) 1,950

Additional information:
The 15
th
of June of 2009 the company made the distribution of the income of the previous year, half
of it was taken to reserves and the other half was paid as dividends.
The 1
st
of October of 2009 a vehicle was sold in cash for 600 m.u. This vehicle had been bought the
1
st
of January of 2004 for 2,000 m.u. and has been depreciated by a 10% each year.
The 30
th
of September of 2009 a new vehicle was bought with a cost of 3,000 m.u. To finance the
purchase, that same day the company obtained a loan form a financial institution for the same
amount, which will be given back in 5 years at equal amounts. The annual interest is 10% on the
outstanding amount and will be paid at the end of each year.
The 12th of February of 2009 the company paid the final portion of a long-term loan received in a
previous year.


11
SOLUTION

2009
3.000

b) Value corrections for impairment (+/-). 400
d) Transfer of grants (-). - 100
e) Income from disposal of non-current assets (+/-). 250
- 50
100

a) Inventory (+/-).
- 950
- 600
- 2.825

- 25
50
- 700
5. Cash flows from operating activities (+/-1+/-2+/-3+/-4)
650


-3000

600
-2400


a) Issuing of
2. Long term debt payable to credit institutions (-). -800,00

1550

-200
700
500

12
EXERCISE 6 LESSON 7

Company ARTEL, Ltd, has available the following information at the end of X1:

BALANCE SHEET AT THE END OF X1
31/12/X1 31/12/X0
A) NON-CURRENT ASSETS
II. Tangible fixed assets
1. Land and structures

630
630

700
700

B) CURRENT ASSETS
II. Inventory
1. Comercial
6. Advances to suppliers
III. Trade accounts receivables and other receivables
1. Trade accounts receivables for sale and services
3. Sundry accounts receivables
V. Short-term financial investments
1. Holdings in equity
VI. Accrual accounts
VII. Cash and cash equivalents
1. Cash

820
770
50
260
260
---
25
25
20
40
40

615
615
---
310
280
30
15
15
----
20
20
TOTAL ASSETS 1,795 1,660

31/12/X1 31/12/X0
A) EQUITY
A-1) Equity
I. Capital
1. Registered capital
III. Reserves
1. Legal and statutory
VII. Income for the year
VIII. (Dividends paid in advance)

805
805
370
370
98
(50)

675
675
395
395
52
---
B) NON-CURRENT LIABILITIES
II. Long term debt
2. Long term debt payable to credit institutions

89
89

---
---
C) CURRENT LIABILITIES
III. Short term debt
2. Short term debt payable to credit institutions
5. Other financial liabilities
V. Trade accounts payable and other payables
1. Trade accounts payable for purchases and services
3. Sundry accounts payable
5. Liability for current tax
6. Other payables to public authorities
VI. Accrual accounts

110
---
110
373
270
35
18
50
----

160
160
---
328
256
60
12
---
50
TOTAL LIABILITIES 1,795 1,660

The list of expenses and revenues that compose the income of year X1 are the following:

13
Amount
Sales revenue
Other operating revenue
Profits from held for trading portfolio
Consumption of goods for sale
Personnel expenses
Depreciation of tangible fixed assets
External services
Financial expenses
Losses from the sale of tangible fixed assets
Reversion of impairment of tangible fixed assets
Sale discounts for early payments
Income tax expense
4,800
70
10
3,120
1,222
30
33
103
150
10
100
34
Income for the year 98

Additional information:

1.- The distribution of income of year X0 is the following: 40 m.u. are distributed to reserves and
12 m.u. were paid as dividends.
Moreover, in X1 the company has paid a dividend in advance of the income of that year, as it can
be seen from the balance sheet.
2.- A building has been sold in cash. The acquisition price had been 270 m.u. and the
accumulated depreciation in the moment of the sale was 60 m.u.
At the end of the year a new building was bought with a cost of 160 m.u. (50 m.u. were paid in
cash and the remaining will be paid at the end of next year).
These are the only transactions with the tangible fixed assets.
3.- At the end of X1 the company has obtained a long-term loan of 92 m.u. from a financial
institution. The opening fees were 3.2 %.
4.- The company has issued capital stock. Half of the amount has been paid by the shareholders
and the other half has been transferred from reserves.
5.- Accrual accounts in the current assets are interest paid in advance that correspond to the debt
with financial institutions. Accrual accounts in the current liabilities are revenues received in
advance.
6.- The profits from the held from trading portfolio were registered at the end of the year for the
valuation at fair value of that portfolio.

REQUIRED: Prepare the Cash Flow Statement of year X1.

14
SOLUTION

A) CASH FLOWS FROMOPERATING ACTIVITIES
1. Income before taxes 132
2. Adjustments to income 263
a) Depreciation of fixed assets (+). 30
b) Value corrections for impairment (+/-). -10
c) Change in provisions (+/-). 0
d) Transfer of grants (-). 0
e) Income from disposal of non-current assets (+/-). 150
f) Income from disposal of financial instruments (+/-). 0
g) Financial revenues (-). 0
h) Financial expenses (+). 103
j) Change in fair value of financial instruments (+/-). -10
3. Changes in working capital -166
a) Inventory (+/-). -205
b) Accounts receivables and other receivables (+/-). 50
d) Accounts payables and other payables (+/-). 39
e) Other current liabilities (+/-). -50
4. Other cash flows fromoperating activities -151
a) Cash payments of interests (-). -123
d) Cash receipts (payments) for income taxes (+/-). -28
5. Cash flows fromoperating activities (+/-1+/-2+/-3+/-4) 78
6. Cash payments for investments (-) -50
c) Tangible fixed assets. -50
7. Cash receipts fromdisinvestments (+) 60
c) Tangible fixed assets. 60
8. Cash flows frominvestment activities (7-6) 10
9. Cash receipts and payments for equity instruments 65
a) Issuing of equity instruments (+). 65
10. Cash receipts and payments for debt instruments -71
a) Issuing of
2. Long term debt payable to credit institutions (-). -160
11. Cash payments of dividends and remuneration of other equity instruments. -62
12. Cash flows fromfinancing activities (+/-9+/-10-11) -68
E) NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 20
Cash and equivalents at the beginning of the period 20
Cash and equivalents at the end of the period 40

15
EXERCISE 7 LESSON 7

Company G-3, Ltd discloses the following information:

INCOME STATEMENT 31/12/20X1 20X1
1. Net turnover.
a) Sales.
4. Procurements.
a) Consumption of goods for sale.
d) Impairment of goods for sale.
5. Other operating revenues.
a) Accessory and other ordinary income.
6. Personnel expenses.
a) Wages, salaries and similar expenses.
b) Employee welfare expenses.
7. Other operating expenses.
a) Outside services.
b) Taxes other than income tax.
8. Fixed assets depreciation expense.
9. Transfers of grants of non-financial non-current assets and others.
A-1) OPERATING INCOME

13. Financial expenses.
b) Of third parties.
A-2) FINANCIAL INCOME

A-3) INCOME BEFORE TAXES

17. Income tax.

A-4) INCOME FROM CONTINUING OPERATIONS
A-5) INCOME FOR THE YEAR

17.150.000
17.150.000
(10.475.000)
(10.500.000)
25.000
500.000
500.000
(3.425.000)
(2.250.000)
(1.175.000)
(650.000)
(150.000)
(500.000)
(250.000)
125.000
2.975.000

(75.000)
(75.000)
(75.000)

2.900.000

(590.000)

2.310.000
2.310.000

BALANCE SHEET AT THE END OF 20X1 31/12/X1 31/12/X0
A) NON-CURRENT ASSETS
II. Tangible fixed assets.
1. Land and structures.
V. Long-term financial investments.
1. Holdings in equity.
15.250.000
15.250.000
140.000
140.000

12.500.000
12.500.000
100.000
100.000
B) CURRENT ASSETS
II. Inventories.
1. Commercial.
6. Advances to suppliers.
III. Trade accounts receivables and other receivables.
1. Trade accounts receivables for sale and services
3. Sundry accounts receivables.
V. Short-term financial investments.
1. Holdings in equity.
VI. Accrual accounts.
VII. Cash and cash equivalents.
2.975.000
2.475.000
500.000
1.050.000
1.000.000
50.000
-
-
12.000
710.000

3.700.000
3.450.000
250.000
770.000
750.000
20.000
200.000
200.000
-
150.000
TOTAL ASSETS 20.137.000 17.420.000
16

31/12/X1 31/12/X0
A) EQUITY
A-1) Shareholders equity.
I. Capital.
1. Registered capital.
2. (Uncalled subscribed capital).
II. Additional paid-in capital.
III. Reserves.
1. Legal and statutory.
VII. Income for the year.
A-2) Adjustments for changes in value
I. Financial instruments available for sale.
A-3) Grants, donations and legacies received.
10.250.000
11.000.000
(750.000)
250.000
2.000.000
2.000.000
2.310.000
28.000
612.500

10.000.000
10.000.000
-
-
1.200.000
1.200.000
1.500.000

-
-
B) NON-CURRENT LIABILITIES
I. Long-term provisions.
4. Other provisions.
II. Long-term debt.
3. Long-term debt from leasing contracts.
IV. Deferred tax liability
250.000
250.000
900.000
900.000
274.500

-

-
-
C) CURRENT LIABILITIES
III. Short-term debt.
2. Short-term debt payable to credit institutions.
3. Short-term debt from leasing contracts.
V. Trade accounts payables and other payables.
1. Trade accounts payables for sale and services.
3. Sundry accounts payables.
5. Liability for current tax.
6. Other payables to public authorities.
1.100.000
1.000.000
100.000
2.162.000
1.175.000
87.000
500.000
400.000

3.000.000
3.000.000
-
1.720.000
1.000.000
95.000
325.000
300.000
TOTAL LIABILITIES 20.137.000 17.420.000

ADDITIONAL INFORMATION:
1. Accrual accounts refer to interest paid in advance for the interest expenses of a short-term debt with
credit institutions.
2. Distribution of income of X0 has been the following: Legal reserve 800,000; Dividends 700,000.
3. The company issued new capital stock: 1,000 shares were issued at a nominal value of 1,000 m.u. and
an issuing value of 1,250 m.u.
4. The capital grant was obtained at the beginning of X1.
5. At the beginning of the year a long-term provision was registered to account for the risk of paying a
possible compensation to an employee for an accident in the workplace.
6. In June of X1 the company sold in cash the holdings in equity that had as a short-term investment and
that were considered as held for trading. These shares were acquired in X0 for a price of 190,000 m.u. and
their value was increased at the end of year X0 because of an increase in its fair value.
7. Land and structures has the following breakdown:
31/12/X1 31/12/X0
Land 5.000.000 4.000.000
Structures 12.000.000 10.000.000
Accumulated depreciation of structures (1.750.000) (1.500.000)
The debt from leasing contracts corresponds to the acquisition of a new building with a cost of
1,000,000 m.u.

REQUIRED: Prepare the Cash Flow Statement of year X1.
17

SOLUTION

A) CASH FLOWS FROM OPERATING ACTIVITIES 200X
1. Income before taxes 2.900.000
c) Change in provisions (+/-). 250.000
d) Transfer of grants (-). - 125.000
e) Income from disposal of non-current assets (+/-).
h) Financial expenses (+). 75.000
j) Change in fair value of financial instruments (+/-).
a) Inventory (+/-). 725.000
b) Accounts receivables and other receivables (+/-). - 280.000
d) Accounts payables and other payables (+/-). 267.000
a) Cash payments of interests (-). - 87.000
d) Cash receipts (payments) for income taxes (+/-). - 415.000
5. Cash flows from operating activities (+/-1+/-2+/-3+/-4) 3.560.000
c) Tangible fixed assets. - 2.000.000

g) Other assets.






200.000

18
g) Other assets.

- 1.800.000


a) Issuing of equity instruments (+). 500.000
e) Grants, donations and legacies received (+). 1.000.000

a) Issuing of
2. Long term debt payable to credit institutions (+).
3. Long term debt payable to subsidiaries and associated
companies (+).
4. Other debt (+).
companies (-).
4. Other debt (-). - 2.000.000
11. Cash payments of dividends and remuneration of other equity
instruments.
a) Dividends (-). - 700.000
- 1.200.000

560.000
150.000
710.000

19
EXERCISE 8 LESSON 7 From exam of course 0708

Company XYZ, Ltd. has prepared the following financial Statements at the end of 2009:

A) NON-CURRENT ASSETS 18.790.000 13.950.000 A) EQUITY 12.100.000 8.000.000
I. Intangible assets. 8.750.000 7.000.000 A-1) Shareholders' equity. 11.050.000 7.300.000
1. Development. 5.000.000 5.000.000 I. Capital. 7.500.000 5.000.000
5. Computer software. 3.750.000 2.000.000 1. Registered capital. 8.000.000 5.000.000
II. Tangible fixed assets. 9.240.000 6.050.000 2. (Uncalled subscribed capital). - 500.000
1. Land and structures. 5.750.000 4.950.000 III. Reserves. 2.300.000 2.600.000
2. Plant and machinery, tools, furniture
and other tangible assets.
3.490.000 1.100.000 1. Legal and statutory. 1.600.000 1.600.000
III. Investment property. 800.000 900.000 2. Other reserves. 700.000 1.000.000
2. Structures. 800.000 900.000 VII. Income for the year. 1.450.000 - 300.000
B) CURRENT ASSETS 2.795.000 2.450.000 VIII. (Dividends paid in advance). - 200.000
II. Inventories. 900.000 950.000
A-3) Grants, donations and legacies
received.
1.050.000 700.000
1. Commercial (goods for sale). 900.000 950.000 B) NON-CURRENT LIABILITIES 4.200.000 3.800.000
III. Trade accounts receivables and
other receivables.
400.000 750.000 I. Long-termprovisions. 500.000 500.000
1. Trade accounts receivables for sale
and services.
400.000 600.000 4. Other provisions. 500.000 500.000
3. Sundry accounts receivables. - 150.000 II. Long-termdebt. 3.250.000 3.000.000
V. Short-termfinancial investments. 1.000.000 -
2. Long-term debt payable to credit
institutions.
1.500.000 3.000.000
1. Holdings in equity. 500.000
5. Other financial liabilities (Long-term debt
with suppliers of tangible fixed assets).
1.750.000
2. Loans to companies (Short-term
receivable from buyers of fixed assets)
500.000 IV. Deferred tax liability. 450.000 300.000
VI. Accrual accounts. 250.000 50.000 C) CURRENT LIABILITIES 5.285.000 4.600.000
VII. Cash and cash equivalents. 245.000 700.000 III. Short-termdebt. 2.150.000 2.070.000
TOTAL ASSETS 21.585.000 16.400.000
2. Short-term debt payable to credit
institutions.
2.150.000 2.070.000

V. Trade accounts payables and other
payables.
3.135.000 2.530.000

1. Trade accounts payables for purchases
and services.
1.000.000 850.000
3. Sundry accounts payable. 950.000 150.000
4. Salary payable. 50.000 300.000
5. Liability for current tax. 395.000
6. Other payables to public authorities. 740.000 1.030.000
7. Customer advances. - 200.000
TOTAL LIABILITIES 21.585.000 16.400.000

20

2009
1. Net turnover. 20.000.000
a) Sales. 20.000.000
4. Procurements. - 11.850.000
a) Consumption of goods for sale. - 12.000.000
d) Impairment of goods for sale, raw materials and other consumables. 150.000
5. Other operating revenues. 1.000.000
a) Accesory and other ordinary income. 1.000.000
6. Personnel expenses. - 3.000.000
a) Wages, salaries and similar expenses. - 3.000.000
7. Other operating expenses. - 3.200.000
a) Outside services. - 3.200.000
8. Fixed assets depreciation expense. - 700.000
9. Transfer of grants of non-financial non-current assets and others. 100.000
11. Impairment and income fromdisposal of non-current assets. -
a) Impairment and losses (reversion of impairment) 300.000
b) Income from disposals and others. - 300.000
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 2.350.000
12. Financial revenues. 50.000
b) From marketable securities and other financial instruments. 50.000
b 2) Of third parties. 50.000
13. Financial expenses. - 500.000
b) Of third parties. - 500.000
14. Change in fair value of financial instruments. 50.000
a) Held for trading and others. 50.000
A.2) FINANCIAL INCOME (12+13+14+15+16) - 400.000
A.3) INCOME BEFORE TAXES (A.1+A.2) 1.950.000
17. Income tax. - 500.000
A.4) INCOME FROMCONTINUING OPERATIONS (A.3+17) 1.450.000

1. The profits from the held from trading portfolio were registered at the end of the year for the
valuation at fair value of that portfolio.
2. The losses of year 2008 have been compensated against reserves. Moreover, in 2009 the company has
paid a dividend in advance of the income of that year, as it can be seen from the balance sheet.
3. Accrual accounts in the current assets are expenses paid in advance.
4. A new grant has been received at the end of 2009 for the acquisition of new machinery. The company
has also registered the transfer to income of the corresponding portion of a previous grant.
5. The breakdown of the short-term debt with credit institutions is the following:

31/12/2009 31/12/2008
Short-term debt with credit
institution
2,000,000 2,000,000
Interest payable 150,000 70,000

REQUIRED: Prepare the Cash Flow Statement of year 2009 (only cash flows from operations and cash
flows from financing activities).

21
SOLUTION

A) CASH FLOWS FROMOPERATING ACTIVITIES 200X
1. Income before taxes 1.950.000
2. Adjustments to income 1.000.000
b) Value corrections for impairment (+/-). - 300.000
e) Income from disposal of non-current assets (+/-). 300.000
g) Financial revenues (-). - 50.000
j) Change in fair value of financial instruments (+/-). - 50.000
3. Changes in working capital 410.000
a) Inventory (+/-). 50.000
b) Accounts receivables and other receivables (+/-). 350.000
c) Other current assets (+/-). - 200.000
d) Accounts payables and other payables (+/-). 210.000
4. Other cash flows fromoperating activities - 475.000
c) Cash receipts of interests (+). 50.000
5. Cash flows fromoperating activities (+/-1+/-2+/-3+/-4) 2.885.000


3.100.000
a) Issuing of equity instruments (+). 2.500.000
e) Grants, donations and legacies received (+). 600.000
- 1.500.000
2. Long term debt payable to credit institutions (-). - 1.500.000
11. Cash payments of dividends and remuneration of other equity
instruments. - 200.000
a) Dividends (-). - 200.000
12. Cash flows fromfinancing activities (+/-9+/-10-11)
1.400.000

22


A) NON-CURRENT ASSETS 27.050 21.050 A) EQUITY 25.644,5 19.510
I. Intangible assets. 3.000 3.050 A-1) Shareholders' equity. 24.227 18.425
3. Intelectual property, trademarks and others. 3.000 3.050 I. Capital. 20.000 14.700
II. Tangible fixed assets. 20.700 13.500 1. Registered capital. 20.000 20.000
1. Land and structures. 5.700 2.500 2. (Uncalled subscribed capital). - - 5.300
2. Plant and machinery, tools, furniture and other. 15.000 11.000 III. Reserves. 3.200 2.800
III. Investment property. 1.900 2.000 1. Legal and statutory. 1.800 1.800
2. Structures. 1.900 2.000 2. Other reserves. 1.400 1.000
V. Long-termfinancial investments. 1.450 2.500 VII. Income for the year. 1.027 925
1. Holdings in equity. 1.450 2.500 A-2) Adjustments for changes in value. 157,5 35
B) CURRENT ASSETS 3.222 4.025 I. Financial instruments available for sale. 157,5 35
II. Inventories. 1.400 900
received.
1.260 1.050
1. Commercial (goods for sale). 1.400 900 B) NON-CURRENT LIABILITIES 2.107,5 2.965
III. Trade accounts receivables and other
receivables.
440 500 I. Long-termprovisions. 500 500
1. Trade accounts receivables for sale and services. 100 200 2. Environmental actions. 500 500
3. Sundry accounts receivables. 300 250 II. Long-termdebt. 1.000 2.000
4. Employee receivables. 40 50 2. Long-term debt payable to credit institutions. 1.000 2.000
V. Short-termfinancial investments. 60 1.050 IV. Deferred tax liability 607,5 465
1. Holdings in equity. 600 500 C) CURRENT LIABILITIES 2.520 2.600
2. Loans to companies. 550 III. Short-termdebt. 2.010 2.010
VI. Accrual accounts. 10 20 2. Short-term debt payable to credit institutions. 2.010 2.010
VII. Cash and cash equivalents. 772 1.555 V. Trade accounts payables and other. 510 590
TOTAL ASSETS 30.272 25.075 1. Trade accounts payables for purchases & s. 80 50
3. Sundry accounts payable. 50 20
5. Liability for current tax. 300 200
6. Other payables to public authorities. 80 220
7. Customer advances. - 100
TOTAL LIABILITIES 30.272 25.075

23

2009
1. Net turnover. 4.500
a) Sales. 4.500
4. Procurements. - 1.150
a) Consumption of goods for sale. - 1.250
d) Impairment of goods for sale, raw materials and other consumables. 100
5. Other operating revenues. 350
a) Accesory and other ordinary income. 200
b) Operating subventions included in income for the year. 150
6. Personnel expenses. - 650
a) Wages, salaries and similar expenses. - 500
b) Employee welfare expenses. - 150
7. Other operating expenses. - 450
a) Outside services. - 450
11. Impairment and income fromdisposal of non-current assets. 350
a) Impairment and losses - 50
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 1.350
a) From holdings in equity instruments. 50
a2) Of third parties. 50
b 2) Of third parties. 25
13. Financial expenses. - 111
b) Of third parties. - 111
14. Change in fair value of financial instruments. 175
b) Transfer to income for the year for available for sale financial instruments. 175
A.2) FINANCIAL INCOME (12+13+14+15+16) 139
A.3) INCOME BEFORE TAXES (A.1+A.2) 1.489
17. Income tax. - 462
A.4) INCOME FROMCONTINUING OPERATIONS (A.3+17) 1.027
A.5) INCOME FOR THE YEAR (A.4+18) 1.027

Additional information (transactions of 2009):

1. Short-term holdings in equity are a portfolio of stocks classified as held for trading. There has been
no profit or loss due to a change in the fair value of these stocks.
2. Long-term holdings in equity are a portfolio of stocks classified as available for sale. The portfolio
includes 100 shares acquired in October of 2008 for a price of 24,5 m.u. per share. The fair value at
the end of 2008 was 25 m.u.
In June of 2009 half of the portfolio has been sold for a price of 28 m.u. per share.
The fair value at the end of 2009 is 29 m.u.
3. The distribution of income of year 2008 is the following: 400 m.u. are distributed to reserves and 525
m.u. were paid as dividends.
4. The uncalled subscribed capital has been called and the company has collected in cash the
outstanding amount from the shareholders during 2009.
5. A new capital subvention has been received at the end of the year.
6. Accrual accounts in the current assets are interest paid in advance that correspond to the debt with
financial institutions.
24
7. During 2009, machinery that had a cost of 4,000 m.u. has been sold. The accumulated depreciation
was 800 m.u. and the profit obtained in the sale was 400 m.u. This was the only sale of tangible fixed
assets.
8. There have been several acquisitions of tangible fixed assets. The breakdown of the fixed assets
depreciation expense is the following:

2009
Depreciation expense of intangible assets 50
Depreciation expense of structures 500
Depreciation expense of plant and machinery 1,500
Depreciation expense of investment property 50
Total fixed assets depreciation expense 2,100

REQUIRED: Prepare the Cash Flow Statement of year 2009.

SOLUTION

During 2009, machinery that had a cost of 4,000 m.u. has been sold. The accumulated depreciation
was 800 m.u. and the profit obtained in the sale was 400 m.u. This was the only sale of tangible
fixed assets.

Sale of machinery
BV= 4000-800=3200 Selling price= 3200+400 = 3600

Short-term holdings in equity are a portfolio of stocks classified as held for trading. There has
been no profit or loss due to a change in the fair value of these stocks.
Long-term holdings in equity are a portfolio of stocks classified as available for sale. The
portfolio includes 100 shares acquired in October of 2008 for a price of 24,5 m.u. per share. The
fair value at the end of 2008 was 25 m.u.
In June of 2009 half of the portfolio has been sold for a price of 28 m.u. per share.
The fair value at the end of 2009 is 29 m.u.

(250) Long term holdings in equity
2.450 Purchase
50 Adjustment
150 Adjustment
200 Adjustment

1.400 Sale
1.450 Final
balance

(133) Adjustments for changes in value

122,5 Sale
35
105 FV
140 FV
157,5Final balance

(479) Tax liability

52,5 Sale
15
45
60
67,5 Final balance

25

2009 transactions:

Increase in value of the 50 shares that are going to be sold:
N Debit Credit
250 Long term holdings in equity 150
900 Profits from available for sale financial assets 150

N Accounts Debit Credit
8301 Deferred tax 45
479 Tax liability for taxable temporary differences 45

Sale of 50 shares:
N Debit Credit
572 Cash 1.400
250 Long term holdings in equity 1.400

N Debit Credit
802 Transfers of profits from available for sale financial
assets
175
7632 Profits from available for sale portfolio 175

479 Tax liability for taxable temporary differences 52,5
8301 Deferred tax 52,5

Change in fair value (50 shares than remain):
N Debit Credit
250 Long term holdings in equity 200


Regularization of group 8 & 9 accounts:
N Debit Credit
1330 Adjustments for changes in value of financial instruments
available for sale
105

N Debit Credit
8301 Deferred tax 52,5
available for sale
122,5
assets
175

N Debit Credit
26
available for sale
140

A new capital subvention has been received at the end of the year.

(130) Grants, donations and legacies
350 transfer 1.050 Previous grant
560 New grant
1.800 Final Balance

(479) Tax liability
150

450
240
540 Final balance

N Debit Credit
4708 Receivable from public authorities 800
940 Revenues of official capital grants 800


N Debit Credit
572 Cash 800
4708 Receivable from public authorities 800

Moreover, 500 have been transfer of the former grant:

N Debit Credit
840 Transfer of official capital grants 500
746
Capital grants, donations, and legacies transferred to
income for the year
500



N Debit Credit
940 Revenues of oficial capital grants 800
130 Grants, donations and legacies 560

27
N Debit Credit
130 Grants, donations and legacies 350
840 Transfer of official capital grants 500

The breakdown of the fixed assets depreciation expense is the following:

2009
Depreciation expense of intangible assets 50
Depreciation expense of structures 500
Depreciation expense of plant and machinery 1,500
Depreciation expense of investment property 50
Total fixed assets depreciation expense 2,100

Acquisitions of non-current assets:

Initial
Balance
- Dep
expense
+/-
impairment
- sales +purchases = Final
Balance
Intangible 3050 -50 0 3000
Land and
Structures
2500 - 500 3700 5700
Plant and
machinery
11000 -1500 -3200 8700 15000
Investment
property
2000 -50 -50 1900

28

1. Income before taxes 1.489
2. Adjustments to income 1.111
b) Value corrections for impairment (+/-). 50
d) Transfer of grants (-). - 500
e) Income from disposal of non-current assets (+/-). - 400
f) Income from disposal of financial instruments (+/-). - 150
g) Financial revenues (-). - 75
h) Financial expenses (+). 111
j) Change in fair value of financial instruments (+/-). - 25
3. Changes in working capital - 620
a) Inventory (+/-). - 500
b) Accounts receivables and other receivables (+/-). 60
d) Accounts payables and other payables (+/-). - 180
4. Other cash flows fromoperating activities - 388
a) Cash payments of interests (-). - 101
b) Cash receipts of dividends (+). 50
c) Cash receipts of interests (+). 25
d) Cash receipts (payments) for income taxes (+/-). - 362
5. Cash flows fromoperating activities (+/-1+/-2+/-3+/-4) 1.592
6. Cash payments for investments (-) - 12.500
c) Tangible fixed assets. - 12.400
e) Other financial assets. - 100
7. Cash receipts fromdisinvestments (+) 5.550
c) Tangible fixed assets. 3.600
e) Other financial assets. 1.950
8. Cash flows frominvestment activities (7-6) - 6.950
9. Cash receipts and payments for equity instruments 6.100
e) Grants, donations and legacies received (+). 800
10. Cash receipts and payments for debt instruments - 1.000
a) Issuing of
2. Long term debt payable to credit institutions (+). - 1.000
11. Cash payments of dividends and remuneration of other equity instruments. - 525
a) Dividends (-). - 525
12. Cash flows fromfinancing activities (+/-9+/-10-11) 4.575
E) NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS - 783
Cash and equivalents at the beginning of the period 1.555
Cash and equivalents at the end of the period 772

29


A) NON-CURRENT ASSETS 199.500 163.750 A) EQUITY 190.050 123.140
II. Tangible fixed assets. 199.500 162.000 A-1) Shareholders' equity. 183.400 116.000
1. Land and structures. 161.100 124.000 I. Capital. 137.500 100.000
2. Plant and machinery, tools, furniture
and other tangible assets.
38.400 38.000 1. Registered capital. 150.000 100.000
V. Long-termfinancial investments. - 1.750 2. (Uncalled subscribed capital). - 12.500 -
1. Holdings in equity. - 1.750 III. Reserves. 16.000 20.000
B) CURRENT ASSETS 64.985 29.450 1. Legal and statutory. 15.000 15.000
II. Inventories. 20.000 14.000 2. Other reserves. 1.000 5.000
1. Commercial (goods for sale). 20.000 14.000 VII. Income for the year. 29.900 - 4.000
III. Trade accounts receivables and
other receivables.
15.000 5.000 A-2) Adjustments for changes in value. - 140
1. Trade accounts receivables for sale
and services.
9.000 5.000 I. Financial instruments available for sale. - 140
4. Employee receivables. 6.000 -
received.
6.650 7.000
VII. Cash and cash equivalents. 29.985 10.450 B) NON-CURRENT LIABILITIES 51.350 63.060
1. Cash. 29.985 10.450 II. Long-termdebt. 48.500 60.000
TOTAL ASSETS 264.485 193.200 2. Long-term debt payable to credit institutions. 48.500 60.000
IV. Deferred tax liability 2.850 3.060
C) CURRENT LIABILITIES 23.085 7.000
III. Short-termdebt. 13.500 -
2. Short-term debt payable to credit institutions. 13.500

payables.
9.450 7.000

1. Trade accounts payables for purchases and
services.
600 6.500
5. Liability for current tax. 8.750
6. Other payables to public authorities. 100 500
VI. Short termaccrual accounts. 135
TOTAL LIABILITIES 264.485 193.200

2009
1. Net turnover. 55.000
a) Sales. 55.000
4. Procurements. - 15.200
a) Consumption of goods for sale. - 15.200
5. Other operating revenues. 29.955
a) Accessory and other ordinary income. 26.000
b) Operating subventions included in income for the year. 3.955
6. Personnel expenses. - 8.000
a) Wages, salaries and similar expenses. - 8.000
7. Other operating expenses. - 1.200
a) Outside services. - 1.200
9. Transfer of grants of non-financial non-current assets and others. 2.000
11. Impairment and income fromdisposal of non-current assets. - 1.000
30
b) Income from disposals and others. - 1.000
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 47.555
b 2) Of third parties. 45
13. Financial expenses. - 1.800
b) Of third parties. - 1.800
b) Transfer to income for the year for available for sale financial instruments. 200
A.2) FINANCIAL INCOME (12+13+14+15+16) - 1.555
A.3) INCOME BEFORE TAXES (A.1+A.2) 46.000
17. Income tax. - 16.100
A.4) INCOME FROMCONTINUING OPERATIONS (A.3+17) 29.900
A.5) INCOME FOR THE YEAR (A.4+18) 29.900


1. The losses of 2008 have been compensated against reserves.
2. The company has increased the capital stock at the beginning of 2009.
3. Long-term holdings in equity are a portfolio of stocks classified as available for sale that has been
sold in 2009. The increase in fair value of this portfolio was 200 in 2008.

REQUIRED:
Register the operations of 2009 described in the additional information.
Prepare the Statement of Changes in Equity of year 2009.
Prepare the Cash Flow Statement of year 2009 (only cash flows from operations and cash
flows from financing activities).

SOLUTION

1. The losses of 2008 have been compensated against reserves.

112 Voluntary reserves 4,000
129 Income for the year (X-1) 4,000

2. The company has increased the capital stock at the beginning of 2009.

103 Uncalled subscribed capital receivable 12,500
572 Cash 37,500
100 Capital stock 50,000

3. Long-term holdings in equity are a portfolio of stocks classified as available for sale that has
been sold in 2009. The increase in fair value of this portfolio was 200 in 2008.
Sale:
N Debit Credit
572 Cash 1,750
250 Long term holdings in equity 1,750

N Debit Credit
31
assets
200
7632 Profits from available for sale portfolio 200


N Debit Credit
available for sale
140
assets
200

FROM THE BALANCE SHEET AND INCOME STATEMENT:
A new capital grant has been received at the end of the year, and a portion of a previous capital
grant has been transferred to income.

(130) Grants, donations and legacies
1,400 transfer 7,000 Previous
grant
1,050 New grant
(net of taxes)
6,650 Final Balance

(479) Tax liability
600 3,000
450
2,850 Final balance

572 Cash 1,500
940 Revenues of official capital grants 1,500


940 Revenues of official capital grants 1,500
130 Official capital grants 1,050

Transfer of a portion of the capital grants from previous years:

840 Transfers of official capital grants 2,000
32
746
Capital grants, donations and legacies transferred to
income for the year
2,000


130 Official capital grants 1,400
840 Transfers of official capital grants 2,000

STATEMENT OF RECOGNIZED REVENUES AND EXPENSES
2009
A) Income for the year 29900
Revenues and expenses recognized directly in equity
I. From valuation of financial instruments
1. Gains/losses from available for sale financial assets
2. Other revenues/expenses
II. From hegding operations
III. Grants, donations and legacies 1500
IV. From actuarial gains and losses and other adjustments
V. Tax effect (450)
B) Total revenues and expenses recognized directly in equity
(I+II+III+IV+V) 1050
Transfers to the income statement
VI. From valuation of financial instruments
1. Revenues/expenses from available for sale financial assets -200
VII. From hegding operations
VIII. Grants, donations and legacies -2000
IX. Tax effect 660
C) Total transfers to the income statement (VI+VII+VIII+IX) -1540
TOTAL RECOGNIZED REVENUES AND EXPENSES (+A+B+C) 29410
33
Capital
STATEMENT OF ALL CHANGES IN EQUITY
Registered Uncalled
Additional
paid-in
capital
Reserves
Prior years'
income
Other
owners'
contributions
Income for
the year
(Dividend
paid in
advance)
Adjustments
for changes in
value
Grants,
donations
and legacies
received
TOTAL
C. BALANCE, ENDOF YEAR 200X 1 100.000 20.000 -4.000 140 7.000 123.140
I. Adjustments for changes in accounting policies, 200X-1.
II. Adjustments for errors, 200X-1.
D. ADJUSTEDBALANCE, BEGINNING OF YEAR 200X 100.000 20.000 - 4.000 140 7.000 123.140
I. Total recognized revenues and expenses. 29.900 -140 -350 29.410
II. Transactions with equity holders.
1. Capital increases. 50.000 -12.500 37.500
2. ( - ) Capital reductions.
3. Conversion of financial liabilities in equity.
(conversion of debentures, debts writting off).

4. ( - ) Dividends distributions. -
5. Transactions with the entity's shares (net).
6. Increase (reduction) of equity from a business combination.
7. Other transactions with equity holders -
III. Other changes in equity. - 4.000 4.000 0
E. BALANCE, ENDOF YEAR 200X 150.000 -12.500 16.000 - 29.900 - 0 6.650 190.050

34
c) Change in provisions (+/-).
e) Income from disposal of non-current assets (+/-). 1.000
g) Financial revenues (-). - 45
j) Change in fair value of financial instruments (+/-). - 200
3. Changes in working capital - 16.300
a) Inventory (+/-). - 6.000
b) Accounts receivables and other receivables (+/-). - 4.000
d) Accounts payables and other payables (+/-). - 6.300
4. Other cash flows fromoperating activities - 8.970
c) Cash receipts of interests (+). 180
5. Cash flows fromoperating activities (+/-1+/-2+/-3+/-4) 35.285

9. Cash receipts and payments for equity instruments 39.000
e) Grants, donations and legacies received (+). 1.500
10. Cash receipts and payments for debt instruments 2.000
a) Issuing of
3. Long term debt payable to subsidiaries and associated companies (+).
4. Other debt (+). 13.500
3. Long term debt payable to subsidiaries and associated companies (-).
4. Other debt (-). - 11.500
11. Cash payments of dividends and remuneration of other equity instruments. -
a) Dividends (-).
12. Cash flows fromfinancing activities (+/-9+/-10-11) 41.000
E) NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 19.535
Cash and equivalents at the end of the period 29.985
35


Company RST, Ltd. provides the following information at the end of 2009:

ASSETS 2009 2008 EQUITY AND LIABILITIES 2009 2008
A) NON-CURRENT ASSETS 6,750 8,300 A) EQUITY 8,746 7,350
II. Tangible fixed assets. 6,750 7,300 A-1) Shareholders equity. 8,431 7,000
2. Plant and machinery, Tools, furniture and other
tangible fixed assets.
6,750 7,300 I. Capital. 6,550 6,000
III. Investment property

1,000 1. Registered capital. 6,550 6,000
1. Land 1,000 III. Reserves. 850 700
B) CURRENT ASSETS 7,575 5,560 1. Legal and statutory. 850 700
II. Inventories. 1,500 2,200 VII. Income for the year. 1,031 400
1. Comercial (goods for sale). 1,500 2,200 VIII. (Dividend paid in advance) (100)
III. Trade accounts receivables and other receivables. 2,700 2,250
received.
315 350
1. Trade accounts receivables for sale and services. 2,700 2,250 B) NON-CURRENT LIABILITIES 1,859 1,474
V. Short-term financial investments. 525 II. Long-term debt. 1,724 1,324
1. Holdings in equity. 525
2. Long term debt payable to credit
institutions.
1,024 1,324
VI. Accrual accounts. 10 5 5. Other financial liabilities. 700
VII. Cash and cash equivalents. 2,840 1,105 IV. Deferred tax liability 135 150
1. Cash. 2,840 1,105 C) CURRENT LIABILITIES 3,720 5,036
III. Short-term debt. 700 1,220

2. Short term debt payable to credit
institutions.
700 1,220

payables.
3,020 3,816
1. Trade accounts payables for purchases. 2,250 2,950
3. Sundry accounts payable. 580 750
TOTAL ASSETS 14,325 13,860 5. Liability for current tax. 190 116
TOTAL EQUITY AND LIABILITIES 14,325 13,860

Income for the year 2009 has the following components:

ACCOUNT AMOUNT
Change in inventory of goods for sale 700
Grants, donations and legacies transferred to income
for the year
50
Income tax expense 200
Interest of debt from financial institutions 1,020
Losses for uncollective accounts 50
Losses from impairment of trade accounts receivable 50
Operating grants, donations and legacies 176
Profits from disposal of investment property 500
Profits from disposal of tangible fixed assets 50
Profits from held for trading portfolio 25
Purchase of goods for sale 20,000
Revenue form holdings in equity instruments, other
companies
50
Sale of goods for sale 30,500
Sale returns of goods for sale 500
Social security in charge of the company 1,000
Supplies 600
Tangible fixed assets depreciation expense 1,200
36
Wages and salaries 5,000


1.- The distribution of income of 2008 has been the following: reserves: 150; dividends: 250.
2.- A machinery has been sold for 100 m.u. during 2009. The acquisition value of the machinery
was 250 m.u. and the accumulated depreciation in the moment of the sale was 200 m.u.
Moreover, a new machinery was bought at the end of the year.
3.- Investment property (land) has been sold as well.
4.- The capital grant was obtained and received in cash at the end of 2008. The grant was
received to finance the acquisition of new equipment that has an annual depreciation expense of
50 m.u.
5.- Accrual accounts in the current assets are interest expenses paid in advance.
6.- During 2009 the company has bought an investment in shares of the BBVA that has been
classified as held for trading.
7.- The company has increased the capital stock at the beginning of 2009.

REQUIRED:
Prepare the Income Statement of year 2009.
Prepare the Statement of Changes in Equity of year 2009.
Prepare the Cash Flow Statement of year 2009.
37
SURNAME____________________________________ NAME_____________
D.N.I._________________

INCOME STATEMENT

(Debit) Credit
2009
a) Sales. 30,000
b) Services rendered.
2. Change in inventory of finished goods and work-in process.
3. Work performed for own assets.
4. Procurements. -20,700
a) Consumption of goods for sale. -20,700
b) Consumption of raw materials and other consumables.
c) Work performed by other companies.
d) Impairment of goods for sale, raw materials and other consumables.
5. Other operating revenues. 176
a) Accessory and other ordinary income.
b) Operating subventions included in income for the year. 176
6. Personnel expenses. -6,000
a) Wages, salaries and similar expenses. -5,000
b) Employee welfare expenses. -1,000
c) Provisions.
7. Other operating expenses. -700
a) Outside services. -600
b) Taxes other than income tax.
c) Losses, impairment and change in provisions for trade operations. -100
d) Other operating expenses.
8. Fixed assets depreciation expense. -1,200
10. Excess of provisions.
11. Impairment and income fromdisposal of non-current assets. 550
a) Impairment and losses.
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11) 2,176

38

a) From holdings in equity instruments.
a1) Of subsidiaries and associated companies.
a2) Of third parties. 50
b) From marketable securities and other financial instruments.
b 1) Of subsidiaries and associated companies.
b 2) Of third parties.
13. Financial expenses. -1,020
a) Of subsidiaries and associated companies.
b) Of third parties. -1,020
c) From capitalization of provisions.
a) Held for trading and others. 25
b) Transfer to income for the year for available for sale financial instruments.
15. Exchange diferences.
16. Impairment and income fromdisposal of financial instruments.
a) Impairment and losses.
b) Income from disposals and others.
A.2) FINANCIAL INCOME (12+13+14+15+16) -945
A.3) INCOME BEFORE TAXES (A.1+A.2) 1,231
17. Income tax. -200
A.4) INCOME FROMCONTINUING OPERATIONS (A.3+17) 1,031
B) DISCONTINUED OPERATIONS
18. Post-tax income of discontinued operations.
A.5) INCOME FOR THE YEAR (A.4+18) 1,031

39
SURNAME____________________________________ NAME_____________
D.N.I._________________

STATEMENT OF RECOGNIZED REVENUES AND EXPENSES 2009
A) Income for the year 1,031
Revenues and expenses recognized directly in equity
I. From valuation of financial instruments
1. Gains/losses from available for sale financial assets
II. From hegding operations
III. Grants, donations and legacies
IV. From actuarial gains and losses and other adjustments
V. Tax effect
B) Total revenues and expenses recognized directly in equity
(I+II+III+IV+V)
Transfers to the income statement
VI. From valuation of financial instruments
1. Revenues/expenses from available for sale financial assets
VII. From hegding operations
VIII. Grants, donations and legacies -50
IX. Tax effect 15
C) Total transfers to the income statement (VI+VII+VIII+IX) -35
TOTAL RECOGNIZED REVENUES AND EXPENSES (+A+B+C) 996

40

Capital
STATEMENT OF ALL CHANGES IN
EQUITY
Registered Uncalled
Additional
paid-in
capital
Reserves
Prior years'
income
Other
owners'
contributions
Income for
the year
(Dividend
paid in
advance)
Other
equity
instruments
Adjustments
for changes in
value
Grants,
donations and
legacies
received
TOTAL
C. BALANCE, ENDOF YEAR 2008 6,000 700 400 -100 350 7,350
I. Adjustments for changes in accounting policies, 2008
II. Adjustments for errors, 2008
D. ADJUSTEDBALANCE, BEGINNING OF YEAR 2009 6,000 700 400 0 -100 350 7,350
I. Total recognized revenues and expenses. 1,031 -35 996
II. Transactions with equity holders.
1. Capital increases. 550 550
2. ( - ) Capital reductions.
3. Conversion of financial liabilities in equity.
(conversion of debentures, debts writting off).

4. ( - ) Dividends distributions. -250 100 -150
5. Transactions with the entity's shares (net).
6. Increase (reduction) of equity from a business combination.
7. Other transactions with equity holders.
III. Other changes in equity. 150 -150 0
E. BALANCE, ENDOF YEAR 2009 6,550 850 0 1,031 0 315 8,746
41
c) Change in provisions (+/-). 0
d) Transfer of grants (-). -50
e) Income from disposal of non-current assets (+/-). -550
f) Income from disposal of financial instruments (+/-). 0
-50
1.020

j) Change in fair value of financial instruments (+/-). -25
3. Changes in working capital -620
a) Inventory (+/-).
700
-450
0
-870
0

4. Other cash flows from operating activities -1.101
-1.025
50
0
-126

5. Cash flows from operating activities (+/-1+/-2+/-3+/-4) 1.055
6. Cash payments for investments (-) -500
e) Other financial assets. -500
g) Other assets.
7. Cash receipts from disinvestments (+) 1.600
c) Tangible fixed assets. 100
d) Investment property. 1.500
g) Other assets.
8. Cash flows from investment activities (7-6) 1.100
42
9. Cash receipts and payments for equity instruments 550
a) Issuing of equity instruments (+).
550



e) Grants, donations and legacies received (+).

10. Cash receipts and payments for debt instruments -820
a) Issuing of



companies (+).

4. Other debt (+).



-820
companies (-).

4. Other debt (-).

11. Cash payments of dividends and remuneration of other equity instruments. -150
a) Dividends (-).
-150

12. Cash flows from financing activities (+/-9+/-10-11) -420
E) NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 1.735
Cash and equivalents at the end of the period 2.840

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DEPARTAMENTO DE CONTABILIDAD Y ECONOMA FINANCIERA

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