Route 102 – One man’s year-long journey……Continued

  • By Mercia Group
  • 15 January 2015 00:00

To mark this momentous year for UK GAAP, I'm embarking on a mission to work my way through FRS 102, reading a portion on each working day of 2015 and writing a short blog entry on my thoughts and musings (be they few or many).

It's Thursday and time for a renamed primary statement...

DAY NINE (15 Jan)

3AM. Islington. Three accountants pace the tense, smoke-filled room. 'C'mon, Frank', one mutters to himself. 'There's GOT to be a new name for the Cash Flow Statement - but what? Think, Frank, think!'. Suddenly his eyes light up, and he grabs a creased analysis pad and a pen. 'YES!' he shouts to his colleagues. 'Why didn't I see it before? Let's call it the Statement of Cash Flows!'

OK, maybe the name change isn't quite that exciting. But there are some notable changes to the format of this key statement and to what it reports on. Rather than being limited to cash proper, the new statement includes cash equivalents, 'short-term, highly liquid investments' that mature within three months of acquisition.

The new statement has three headings in the place of the previous nine - operating, investing and financing activities.

All cash (and cash equivalent) flows must fit into this framework, possibly meaning that items such as tax and interest must be apportioned between the three headings.

If all this sounds familiar to anyone, then yes - aspects of the new statement look eerily similar to the 'source and application of funds' statement that preceded the FRS 1 cash flow statement...

More on section 7 tomorrow!

P.S. If you missed yesterday's instalment click here

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