Presentation of Movement in a Non-current Financial Asset in the Cash Flow Statement

(Ind AS) 115, ‘Revenue from Contracts with Customers’ states that the consideration received or receivable by the Company is a right to a financial asset. And, Operating activities are the principal revenue-producing activities of the entity, and other activities that are not investing or financing activities. Thus, the change in operating receivables should be adjusted as ‘changes in operating receivables’ to determine the cash flow from operating activities under the indirect method.

But, where a portion of the financial asset, contains any interest element also then it is considered a financing component in the transaction; such financing component which represents payment due to time value of money should be separated from the financial asset as per the relevant applicable Standard and should be considered and classified as cash flows from investing activities considering the requirements of paragraphs 31 and 33 of Ind AS 7, ‘Statement of Cash Flows’.

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