How should repayment of a long term loan comprising repayment of the principal amount and interest due to date on the loan be treated in a cash flow statement?
(a) The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities” section; the interest payment belongs either in the “operating activities” section or the “financing activities” section.
(b) The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities” section; the interest payment belongs either in the “operating activities” section or the “investing activities” section.
(c) The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities” section; the interest payment belongs in the “operating activities” section (because IAS 7 does not permit any alternatives in case of interest payments).
(d) The repayment of the principal portion of the loan is a cash flow belonging in the “investing activities” section; the interest payment should be netted against interest received on bank deposits, and the net amount of interest should be disclosed in the “operating activities” section.