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.