Deferred income taxes and the statement of cash flows
The operating activities section from recent statements of cash flows for Group Air France-KLM is shown below. A note from the Group’s fiscal year 2011 Annual Report is also provided.
Required
(a) Deferred taxes are a negative adjustment to net income in both years. What do these adjustments signify?
(b) What events or circumstances gave rise to the adjustments?
|
in € million, period from April 1 to March 31 |
2011 |
2010 |
|
Net income for the period – Equity holders for Air France-KLM |
613 |
(1 559) |
|
Noncontrolling interests |
(1) |
(1) |
|
Amortization, depreciation, and operating provisions |
1,676 |
1,675 |
|
Financial provisions |
(3) |
7 |
|
Gain on disposals of tangible and intangible assets |
(11) |
61 |
|
Loss/(gain) on disposals of subsidiaries and associates |
(13) |
— |
|
Gain on WAM (ex Amadeus) operation |
(1,030) |
— |
|
Derivatives – nonmonetary result |
(25) |
(8) |
|
Unrealized foreign exchange gains and losses, net |
33 |
13 |
|
Share of (profits)/losses of associates |
21 |
17 |
|
Deferred taxes |
(215) |
(591) |
|
Other nonmonetary items |
(209) |
143 |
|
Subtotal |
836 |
(243) |
|
(Increase)/decrease in inventories |
(10) |
(28) |
|
(Increase)/decrease in trade receivables |
171 |
(89) |
|
Increase/(decrease) in trade payables |
245 |
126 |
|
Change in other receivables and payables |
108 |
(564) |
|
Net cash flow from operating activities |
1,350 |
(798) |
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