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Cash flows from operating activities: Net income $ xx Add/deduct items not affecting cash: Decrease (increase) in accounts receivable (xx) Depreciation and amortization expense xx Increase (decrease) in accounts payable xx Decrease (increase) in inventories xx Loss on sale of equipment Net cash flows from operating activities $ xx

Example 6.3: Statement of Cash Consolidated Entities

A consolidated statement of cash flows must be presented when a complete set of consolidated financial statements is issued. The consolidated statement of cash flows would be the last statement to be prepared, as the information to prepare it will come from the other consolidated statements (consolidated statement of financial position, income statement, and statement of retained earnings). The preparation of a consolidated statement of cash flows involves the same analysis and procedures as the statement for an individual entity with a few additional items. When the indirect method is used, the additional noncash transactions relating to the business combination, such as the differential amortization, must also be reversed, and all transfers to affiliates must be eliminated, as they do not represent cash inflows or outflows of the consolidated entity.

      All unrealized intercompany profits should have been eliminated in preparation of the other statements. Any income or loss allocated to noncontrolling parties would need to be added back, as it would have been eliminated in computing consolidated net income but does not represent a true cash outflow or inflow. Finally, only dividend payments that are not intercompany should be recorded as cash outflows in the financing activities section.

      In preparing the operating activities section of the statement by the indirect method following a purchase business combination, the changes in assets and liabilities related to operations since acquisition should be derived by comparing the consolidated statement of financial position as of the date of acquisition with the year‐end consolidated statement of financial position. These changes will be combined with those for the acquiring company up to the date of acquisition as adjustments to net income. The effects due to the acquisition of these assets and liabilities are reported under investing activities.

Example 6.4: Cash and Cash Equivalents—Accounting Policy

      The company considers all investments with original maturities of three months or less when purchased to be cash equivalents.

Example 6.5: Accounting Policy for Cash and Cash Equivalents, Including Details

      Cash and cash equivalents consist of cash on hand and other highly liquid investments that are unrestricted as to withdrawal or use, and which have an original maturity of three months or less when purchased. The Company maintains cash and cash equivalents with various financial institutions in the United States. As of June 30, 2018, and 2017, a cash balance of $84,865 and $46,279, respectively, was maintained at U.S. financial institutions and were insured by the Federal Deposit Insurance Corporation or other programs subject to certain limitations.

Example 6.6: Amount of Interest and Income Taxes Paid and Noncash Investing and Financing Activities

Supplemental Cash Flow Information
Cash paid for interest, net of amount capitalized	$39,213	$41,954
Noncash Investing and Financing Activities
Equipment acquired with notes payable—equipment	—	$82,229
Equipment acquired with obligation under capital lease	—	165,816
Accounts payable paid with exchange of equity	—	63,000
Equipment note revised through repossession of equipment	$87,912

Example 6.7: Amount of Interest and Income Taxes Paid and Noncash Investing and Financing Activities

Supplemental Cash Flow Information
Cash paid for interest	$23,700
Cash paid for income taxes	$35,700
Noncash investing and financing transactions
Derivative liability of convertible secured promissory note	$75,957
Common stock issueds for debt inducement	$36,720

Example 6.8: Nature of Restrictions on Cash and Cash Equivalents

Restricted Cash At June 30, 20X8, Best Foods had on deposit approximately $20,000 securing a lease bond for one of its properties. The cash securing the bond is restricted from access or withdrawal so long as the bend remains in place.

Example 6.9: Nature of Restrictions on Cash and Cash Equivalents with Internal Reference

Restricted Cash Restricted cash includes cash balances that are legally or contractually restricted to use. The Company's restricted cash as of July 31, 20X6, included proceeds that were placed in escrow in connection with the sale of a restaurant. See Note 3.

Example 6.10: Disclosure in Tabular Format—Restricted Cash Presented in More Than One Line Item on the Balance Sheet

      The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows.

Current Presentation

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