Ind AS 7 "Statement of Cash Flows" The opening balance sheet at 1st April, 20X6 of an Indian company (which account for its transactions in INR (₹),…

The foreign currency loan, having been translated at the rate ruling at the receipt date to 1,91,400 (US $ 2,200 x 87), is translated at the balance sheet date to 1,87,000 (US $ 2,200 x 85). The exchange gain of 4,400 is recognised in the Statement of profit and loss. The cash is made up of 1,00,000 (received from the share issue) and - 1,91,400 (received on converting the currency loan immediately to ₹). Statement of Cash Flows ₹ Cash flows from operating activities Profit 4,400 Less: Foreign exchange gain (4,400) Net cash flow from operating activities A 0 Cash flows from financing activities Receipts of foreign currency loan 1,91,400 Net cash flow from financing activities B 1,91,400 Net increase in cash and cash equivalent A+B 1,91,400 Cash and cash equivalents at the beginning of the reporting period 1,00,000 Cash and cash equivalents at the end of the reporing period* 2,91,400 * Represents year end cash balances. The exchange gain of 4,400 does not have any cash flow effect and is related to financing activities. Therefore, it needs to be eliminated from profit. A similar adjustment would be necessary if the loan remains outstanding at 31st March, 20X8.