Introduction
Some ICAG questions test whether you know a format. This one tests whether you can trace five pieces of scattered additional information through an entire consolidated cash flow statement without losing a single thread. The Chief Examiner’s own report confirms this question — despite being, in the examiner’s words, “very straightforward” — is exactly where a considerable number of Corporate Reporting candidates lost their footing. This article walks through the real question, the full solution, and the reasoning so you never repeat their mistakes.
The Question
Pato Aluworks Group — three subsidiaries, one associate — provides its consolidated statement of profit or loss and statement of financial position for the year ended 31 December 2024, plus five notes: a goodwill impairment test on subsidiary Jaritan, the mid-year disposal of subsidiary Asanka, a cash share issue followed by a bonus issue, depreciation and an ordinary asset disposal, and an accrued-interest balance hidden inside trade payables. Required: a full consolidated statement of cash flows under the indirect method, including the reconciliation note. Total: 20 marks.
Reading the Traps
Every note in this question is a trap for candidates who treat cash flow statements as a mechanical template rather than a live trace-through exercise. The goodwill note tests whether you know an impairment can be charged to profit or loss and added back as non-cash even when no goodwill balance survives on the statement of financial position. The disposal note tests whether you can isolate the net cash effect of losing a subsidiary mid-year rather than folding it into ordinary asset movements. The share capital note tests whether you can separate a genuine cash share issue from a non-cash bonus issue funded out of the share deals account.
The Full Worked Answer
Operating activities start from cash generated from operations of GH¢1,082,812 (per the reconciliation note), plus the Jaritan impairment add-back of GH¢37,500 and the impairment reversal of GH¢2,500, less interest paid of GH¢47,500 and tax paid of GH¢182,700 — giving net cash inflow from operating activities of GH¢892,612.
Investing activities include PPE additions of (GH¢1,013,450), the intangible asset purchase of (GH¢22,000), proceeds of GH¢135,000 from an ordinary plant disposal, dividends received from the associate of GH¢113,850, and the net cash effect of the Asanka disposal — calculated as 75% of Asanka’s net assets (GH¢437,512 × 75%) plus the GH¢23,625 profit on disposal, less the GH¢3,375 cash disposed of, giving GH¢348,384. Net cash outflow from investing activities: (GH¢438,216).
Financing activities include proceeds from the cash share issue of GH¢247,500 — calculated from the combined movement in share capital and the share deals account, which correctly excludes the bonus issue — lease repayments of (GH¢60,900), dividends paid to the parent’s shareholders of (GH¢598,950), and dividends paid to non-controlling interest of (GH¢28,547). Net cash outflow from financing activities: (GH¢440,897).
The net increase in cash for the year is GH¢13,500, taking the cash balance from GH¢32,625 to GH¢46,125 — which ties directly to the statement of financial position.
The Jaritan goodwill impairment working deserves special attention: grossing up the GH¢67,500 goodwill for the unrecognised 40% non-controlling interest share gives notional goodwill of GH¢112,500; added to net assets of GH¢180,000, that’s a carrying value of GH¢292,500 against a recoverable amount of GH¢230,000 — an impairment loss of GH¢62,500, of which Pato’s 60% share, GH¢37,500, is charged to profit or loss and added back in the reconciliation note as a non-cash item.
Exam Tip: Whenever a group cash flow question gives you a subsidiary disposal note, resist the urge to treat it as “just another PPE movement.” Isolate its net cash effect as a single standalone line in investing activities, and strip its opening balances out of every other working — PPE, receivables, payables — before you calculate movements for the remaining group.
Marking Scheme and Examiner Comments
The March 2025 Chief Examiner’s Report stated directly: “This question on consolidated cashflow statement was very unpopular and unexpected although the question was very straightforward. Few candidates could identify the effect of group transactions on the consolidated cashflow statement. Candidates appeared unprepared… Some candidates deviated from the question and produced format akin to consolidated statements of financial position rather than consolidated cash flow statements… It is recommended that the topic on cash flow statement be treated thoroughly by tutors and candidates.”
Conclusion
This question rewards candidates who treat every note as a trace-through exercise rather than a template-filling exercise — following the goodwill impairment, the subsidiary disposal, and the bonus issue through to their correct, and only correct, resting place in the statement. Master that instinct, and consolidated cash flow questions stop being intimidating and start being some of the most reliably scorable marks on the paper.
Ready to Go Deeper?
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