Cash Flow Statements: US GAAP Vs. IFRS
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With respect to the treatment of activities in cash flow statements, there are some differences in IFRS and US GAAP.
| Activity | US GAAP | IFRS |
| Dividend paid to shareholders | Financing activity | Operating or financing activity |
| Interest paid on loans | Operating activity | Operating or financing activity |
| Interest and dividend received | Operating activity | Operating or investing activity |
| Taxes paid | All taxes reported as operating activity | Income 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.