ICANFinancial AccountingStatement of Cash Flows2020

Chukwuemeka & Sons Plc acquired 100% of the shares of Nkemdirim Ltd on 1 July 2023 for a total consideration of ₦185,000,000, of which ₦150,000,000 was paid in cash and ₦35,000,000 was satisfied by issuing the group's own ordinary shares. At the acquisition date, Nkemdirim Ltd held cash and cash equivalents of ₦12,000,000. How should the acquisition be presented in the consolidated statement of cash flows for the year ended 31 December 2023?

AInvesting outflow of ₦185,000,000 and financing inflow of ₦35,000,000
BInvesting outflow of ₦138,000,000, with the share consideration disclosed as a non-cash transactionCORRECT
CInvesting outflow of ₦150,000,000, with the share consideration and acquired cash disclosed separately as non-cash items
DInvesting outflow of ₦173,000,000, with the share consideration disclosed as a non-cash transaction
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Why the answer is B, and why the others tempt you.
Under IAS 7 paragraph 40, the cash paid net of cash acquired is presented as a single investing outflow. Cash paid is ₦150,000,000 less cash acquired of ₦12,000,000 = ₦138,000,000 net investing outflow. The share consideration of ₦35,000,000 is a non-cash transaction disclosed in a supplementary note per IAS 7 paragraph 43. The gross cash paid (before netting acquired cash) is not the correct presentation.
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