Level I CFA: FRA Understanding Cash flow Statements-Lecture 1

This is Reading 23 for the 2021 exam.
This CFA exam prep video lecture covers:
Components and format of the cash flow statement
Summary of differences between IFRS and U.S. GAAP
Direct and indirect methods for reporting cash flow from operating activities
Non-cash activities
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[@IFT-CFA]

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[@umijanrakhmankulov6533]

You forgot to mention that IFRS distinguishes financial and non-financial companies. So the interests received for non-financial companies would be the investing operations but for financial companies (banks) it would be the operating operations. And others are considered anologically

[@yogeshshankariya2841]

beautiful bird voice.

[@karansaxena1244]

👌👌Sir you are the best

[@krishnalahoti]

At 5:35 where you have shown an example
Could you please explain why "Receipts from sale of van" is a CF and not the "Gains from sale of Van" ?
What is the difference between Gain and Receipt in this case?

[@IFT-CFA]

because receipts represent actual cash received whereas gain does not represent cash receipt; rather it is just a difference between sale price and cost.
IFT Support Team

[@BLMVFitness]

Sir I did not understand why gain is an investiment, but not a CF. Can you help me with this?

[@IFT-CFA]

Gain on sale does not represent any cash receipt. Hence, it is not a cash flow.
IFT Support Team

[@neelmoradiya1389]

👍👍🙏🙏

[@RyanInCanada]

why is gain from sale of van? it is part of the disposal from the car sold

[@IFT-CFA]

Dear Ryan,
Gain from the sale of an asset is equal to the selling price minus the book value. Gain is shown separately on the income statement. In this example van was sold for 18,000, which comprised of book value = 10,000 and gain = 8,000. The cash we received was actually 18,000. Hence we show 18,000 in our cash flow statement.
IFT Support Team

[@masensen858]

i think you should have spent more time explaining the direct/ indirect method. thank you.

[@IFT-CFA]

thanks for your feedback
IFT support team

[@TechMaster-of8sg]

Is it right to call the "gain from sale of van" an unrealized profit?

[@udaypullela8098]

Why is salaries paid not considered as CF?

[@IFT-CFA]

That example is about identifying cash flow from investing. Salaries paid is a cash flow but it is not a cash flow from investing activity. It is cash outflow from operating activity.
IFT Support Team

[@mohammedmuzibur1935]

Thank you

[@IFT-CFA]

You're welcome
IFT Support Team