Investment activities by the direct method

1

Dear @lubos

Why are purchases of property, plant and equipment (fixed assets) wrongly classified in cash flow by the direct method? I have noticed that they are automatically classified in the operation activities and that is not correct. It is an investment activity according to IAS 7. But it is more striking to me that in the indirect method they are correctly classified as investment activities.

2

Could you demonstrate using the screenshot? You can create dummy business file for this purpose. Then I can explain why.

3

@lubos

Attached as requested.

Note: The same example generated through the different methods (direct and indirect).

Direct Method

Direct Method
Direct Method1366×708 37.8 KB

Indirect Method

Indirect Method
Indirect Method1366×708 41.5 KB

4

@lubos

Attached as requested.