Lesson 6 of 6 · 12 min
Cash flow statements under IFRS and US GAAP
US GAAP fixes where interest, dividends and taxes go, while IFRS lets companies choose between two sections for interest and dividends, so the same company can report different CFO under the two frameworks.
In short
- Interest and dividends received: US GAAP operating; IFRS operating or investing.
- Interest paid: US GAAP operating; IFRS operating or financing.
- Dividends paid: US GAAP financing; IFRS operating or financing.
- Taxes paid: operating under both, but IFRS allows allocating part to investing or financing when it can be specifically identified with them. Both require cash taxes to be disclosed separately.
- Bank overdrafts: IFRS may include them in cash and cash equivalents; US GAAP does not and treats them as financing.
- Both allow the direct or indirect method and encourage the direct one; under US GAAP a direct-method statement must still include a reconciliation of net income to CFO.
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