Cash flows for contra arrangement with customer - operating vs investing


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Mar 27, 2019
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In 2017, we entered into SPA with a Developer to purchase 5 units of investment properties. The Developer is a related party of our customer (named as "A")
We have arranged the payment to Developer by assigned the debt owing from A. So in 2017, no payment being made yet as we have yet billed A.
In 2017, we Dr. IP; Cr. Other payable a/c.

In 2018, when we issued final billing to the customer, we have entered settlement agreement with the customer and Developer to contra the debts. So we Dr. Other payable a/c.; Cr. Trade debtor

We are using indirect method accounted for the operating cash flows.

Statement of CF:
2017
- all show nil as no payment being made

2018
- assume the contra value is $1m
There is 2 option:

1st option: show gross value, i.e.

Operating CF - $1m
Investing CF - ($1m)
Net CF - Nil

2nd option: excluded the transaction from cash flows and disclosed as notes, i.e.

Operating CF - Nil
Investing CF - Nil (Note Z)
Net CF - Nil

Note Z:
Purchase of IP - $1m
Contra settlement - ($1m)
Net cash flow - Nil

Actually I preferred 1st option, is it the treatment in compliance with IFRS?
 

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