how do you treat doubtful debt expense and deferred taxation when preparing cash flow statements?

Answer 1

You ignore them. Doubtful debts would have been taken care of when you calculate increase/decrease in accounts receivable cos the AR is already net of any allowance for doubtful debts. Your cash flow statement starts off with profit BEFORE taxation, so current and deferred taxes do not figure in a cash flow statement EXCEPT for taxes actually paid or refunded. This you take into account before arriving at Net cash from operating activities.

Click on the link for the IAS 7 Cash Flow statements, scroll to the last bit and take a look at the illustrative cfs by indirect method.

Indirect Method Cash Flow Statement -

Cash flows from operating activities
Profit before taxation 3,350
Adjustments for:
Depreciation 450
Foreign exchange loss 40
Investment income (500)
Interest expense 400
Sub-total 3,740
Increase in trade and other receivables (500)
Decrease in inventories 1,050
Decrease in trade payables (1,740)
Cash generated from operations 2,550
Interest paid (270)
Income taxes paid (900)

Net cash from operating activities 1,380