Describe the key features of each method

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Reference no: EM13500711

The income statements and balance sheets for the years ended 30 September 2009 and 2008 of McAllister Ltd are shown below:

 

 

Year to

30 September

2009

Year to

30 September 2008

 

€'000

€'000

Sales

14,250

13,100

Cost of sales

(4,000)

(3,800)

Gross profit

10,250

9,300

Expenses

(6,330)

(5,400)

Operating profit

3,920

3,900

Interest payable

(600)

(780)

Profit before tax

3,320

3,120

Taxation

(1,280)

(1,030)

Profit after tax

2,040

2,090

 

 

30 September

2009

30 September

2008

 

€'000

€'000

€'000

€'000

Property, plant and equipment

 

 

 

 

Cost

14,950

 

14,735

 

Depreciation

(4,300)

10,650

(3,500)

11,235

 

 

 

 

 

Current Assets

 

 

 

 

Inventory

2,000

 

1,555

 

Trade Receivables

2,300

 

1,650

 

Cash

80

 

-

 

 

 

4,380

 

3,205

Current liabilities

 

 

 

 

Trade and other payables

1,120

 

2,100

 

Bank Overdraft

-

 

250

 

Taxation

120

 

80

 

 

 

1,240

 

2,430

Net current assets

 

3,140

 

775

Total assets less current liabilities

 

13,790

 

12,010

Long term loan

4,350

 

4,810

 

Net assets

 

9,440

 

7,200

 

 

 

 

 

Capital and Reserves

 

 

 

 

€1 ordinary shares

3,200

 

3,000

 

Retained profit

6,240

 

4,200

 

 

 

9,440

 

7,200

 

Notes:

  • During the year to 30 September 2009, a piece of equipment was sold for €20,000. The item had an original cost of €35,000 and McAllister Ltd made a loss on disposal of €10,000.

 

  • During the year to 30 September 2009, a production line was purchased for €250,000. However, the amount remained outstanding at the year end, and is included in the trade and other payables figure on the balance sheet. There were no other payables in 2008.

 

  • There were no amounts outstanding for interest payable at the 2008 or 2009 balance sheet dates.

Requirement:

a)      Produce a cash flow statement for the year ended 30 September 2009, ensuring that the structure of your statement is in accordance with IAS7 and that you show your workings clearly.

b)      There are two methods for the presentation of cash generated from operations.  Describe the key features of each method and their relative advantages and disadvantages.

Reference no: EM13500711

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