When classifying cash flows for acquisitions of associates, payments are categorized under which section?

When classifying cash flows for acquisitions of associates, the payments fall under cash flows from investment activities. This categorization is in line with the definition and purpose of investing activities, which include cash transactions for the purchase and sale of physical and financial investments.

Acquiring an associate represents a long-term investment in another entity, as it typically involves purchasing equity interests or other financial instruments with the intent of influencing or controlling operations. The cash outflows for such acquisitions are recorded as investments, reflecting the outlay of funds to enhance future returns from these investments, aligning with the investment activities section of the cash flow statement.

In contrast, financing activities involve transactions that affect the capital structure of the entity, operating activities reflect the core revenue-generating activities, and tax activities do not typically categorize cash flows thus. Therefore, classifying cash flows related to the acquisition of associates as cash flows from investment activities accurately reflects the nature of the transaction.