Cash Flow Statements: US GAAP Vs. IFRS

With respect to the treatment of activities in cash flow statements, there are some differences in IFRS and US GAAP.

Dividend paid to shareholdersFinancing activityOperating or financing activity
Interest paid on loansOperating activityOperating or financing activity
Interest and dividend receivedOperating activityOperating or investing activity
Taxes paidAll taxes reported as operating activityIncome tax reported as operating activity except when tax is an expense related to investing or financing activity

An example of the tax treatment is provided below. Assume that a company sold land for $100,000 and paid taxes worth $10,000. Under US GAAP, we will report $100,000 as inflow from investing activity and $10,000 as outflow from operating activity. Under IFRS, we will report net inflow of $90,000 from investing activity.

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