BC48 Prior to the amendments in 2024, IAS 7 permitted an entity to choose to classify interest and dividend cash flows as operating, investing or financing activities in its statement of cash flows. As a result, classification varied, even among entities in the same industry. The IASB decided to remove the classification choice for most entities, because users of financial statements indicated that diversity in the classification between entities in the same industry:
(a) reduces comparability, making their analyses more difficult; and
(b) is often not meaningful - that is, the different classifications of these cash flows do not necessarily convey information about the role of interest and dividends in an entity’s business activities.
Dividends paid
BC49 The IASB decided to require all entities to classify dividends paid as cash flows from financing activities because dividends paid are a cost of obtaining financing. Before the amendments, IAS 7 explained that classifying dividends
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