Some excerpts from IAS7

interest and dividends received and paid may be classified as operating,

investing, or financing cash flows, provided that they are classified
consistently from period to period [IAS 7.31]
Since your textbook prefers to put interest received in the investing section
(p. 232), well follow this approach and also put dividends received in
investing section too. In lecture notes that I sent they were in operating
section. This however will not affect net increase/decrease in cash at the end
of the statement.
cash flows arising from taxes on income are normally classified as
operating, unless they can be specifically identified with financing or
investing activities [IAS 7.35]
operating activities are the main revenue-producing activities of the entity
that are not investing or financing activities, so operating cash flows include
cash received from customers and cash paid to suppliers and employees [IAS
7.14]
investing activities are the acquisition and disposal of long-term assets and
other investments that are not considered to be cash equivalents [IAS 7.6]
financing activities are activities that alter the equity capital and borrowing
structure of the entity [IAS 7.6]
Few advanced issues
Disposal/sale of fixed assets
Cost of asset Accumulated depreciation = Book value (Carrying amount)
Book value (Carrying amount) Proceeds from sale (residual value) = Gain or loss
on disposal
Book value > Proceeds from sale Loss on disposal
Book value < Proceeds from sale Gain on disposal
Treatment of accumulated depreciation
Depreciation and accumulated depreciation in the balance sheet are just estimates
that were made using one of the three methods. The actual depreciation and
accumulated depreciation are determined when the asset is disposed (sold). At this
moment the depreciation and accumulated depreciation will be written off.

Also note that disposal of the asset does not necessarily coincides with the end of
the accounting period.
Therefore, in Sport Shoes example, depreciation is not just the difference between
closing and opening balance in accumulated depreciation. It is not $296,000 $251,000 = $45,000.
Instead it is:

Disposal 47,000
C/Bal 296,000
343,000

O/bal 251,000
Depn exp 92,000
343,000

Another way to look at it:

Closing balance accumulated depreciation - Opening balance accumulated
depreciation + Depreciation estimate during the year Actual accumulated
depreciation at disposal,
-296,000 (-251,000) + 92,000 = -47,000
Note that since accumulated depreciation is a contra-asset account, the normal
opening balance is CR.
Treatment of revaluations
Revaluation is a non-cash transaction, and hence adjustment is needed to changes
in asset account in the balance sheet.
Example, if asset value in the balance sheet changes as $250 $275, and we are
told that there was upward revaluation of $24, then the cash outflow is $275 $250
$24 = $1.
In other words, balance sheet tells that assets were purchased, hence increase by
$25. However of this balance sheet increase $24 was due to revaluation, hence we
purchased only $1 worth of asset.
The opposite is the case of downward revaluation.
Exercise 5.10, p. 235 of the textbook.
Land and buildings
Plant and machinery
Cost
Accumulated depreciation
Net
Fixtures and fittings
Cost
Accumulated depreciation

1 January
150,000

31 December
200,000

80,000
(20,000)
60,000

100,000
(30,000)
70,000

20,000
(10,000)

25,000
(12,000)

Net

10,000

13,000

Land and buildings were revalued upwards by $20,000

Fixtures and fittings which had cost of $5,000, and which had been depreciated by
$3,000, were sold for $1,000.
Prepare investing section of the cash flow statement.
Answer
Cash flow from investing activities
Purchase of land and buildings
Purchase of plant and machinery
Purchase of fixtures and fittings
Proceeds from sale of fixtures and fittings
Net cash used in investing activities

$
(30,000)
(20,000)
(10,000)
1,000
(59,000)

A.
Change in land account on the balance sheet: 200,000 150,000 = 50,000
Revaluation upwards is 20,000
Hence actual cash spent on purchase of land is 50,000 20,000 = 30,000
B.
Cash spent on purchase of machinery is just a difference between two balance
sheets: 100,000 80,000 = 20,000
C. Purchase of fixtures and fittings

O/bal 20,000
Cash (purchase of equip) X
30,000

Disposal 5,000
C/Bal 25,000
30,000

X = 30,000 20,000 = 10,000

Note the account is for purchase of assets, hence normal balance is DR.
D. Sale of fixtures and fittings ate residual value
1,000
Treatment of share capital and bonus shares

In the textbook, the increase in share capital in two balance sheets was from
$150,000 to $240,000, i.e. by $90,000. If this was solely due to issues of shares for
cash, there would be no need for adjustments. If, however, there was an issue of
bonus shares/share dividend, then this form of dividend does not involve cash.
Hence, cash inflow will be less than $90,000. E.g. if bonus share issue was $50,000,
then the cash inflow from issue of shares and share dividends during the year would
only be $90,000 - $50,000 = $40,000.