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Just new op tuition and quite happy to join the crew. Mr mike seems to be very resourceful.
Well since we’re dealing with IAS7, could you give me the steps to follow when dealing with a mid year acquisition?
Would be going in for F3 in a couple of hours.
Mid-year acquisitions are not relevant for F7 cash flows! Let’s leave that one until we get to P2! particularly since you’ve only just finished F3 – did you pass?
Well I wrongly quoted the standard. Wanted the know more about their treatment in the consolidated income statement.
Went in for the paper based examsn’ waiting for feb 8th.
Hope you did enough to pass – fingers crossed until February
Thanks mr mike and please i want ask
why you do not do working in SCF like consolidation financial statements ? and is marker give me marks on my working? and if my last figure is wrong i will take marks on my all answer ? and for your shortcuts like TNCA can i use it like you or can i change it ?
There really is no need to get into workings as complicated as for consolidations. The most difficult is the working for TNCA but even that becomes relatively easy with practice.
Yes, you will get marks for workings if you don’t have the time to finish the cash flow statement – but you need to head up your workings to identify which figure you are calculating and therefore also how much CASH is involved in, say, investment income received.
If you follow my style of attacking these questions, your last figure cannot be wrong! If you mean the figure that you have just calculated in your workings, say, investment income received, then you will not gain the mark.
Work on the principle that for each and every figure you get correct in the Statement of Cash Flows, you will earn one mark
I would abbreviate TNCA, INCA, C & E, Pbles, Rbles …..yes, I would abbreviate – just so long as your abbreviation is pretty clear. A bit of a problem with “inv” for inventory and “inv” for investments
You were great !!! Thanks for increasing self confidence ! This really helps !!!
well explained Dankie!
Hi all , another wonderful lecture, thanks Mike.
could someone please help me with a few issues as i seem to understand this lecture but there are two things i cant get around.
1. how do we work out the $32 increase in receivables? am i wrong to assume it should have been $584 – $492 = $92
2. in the answer at the back of the text, the cash &equivalents c/f were worked out as 17+32-60 = $(11). the bank liability of $60 was included.
Hi Frank, thanks for your appreciative comments. The answer in the back of the notes shows the increase in receivables as (92). That’s correct so far as I am concerned
The cash and equivalents figure HAS included as a deduction the 60 overdraft at the bank at the end of the year netted off the figure of 17 + 32. So, yes, I ALWAYS include the overdrawn position as a cash and equivalent amount although, in practice, consideration needs to be given to the nature of the overdraft – is it long term financing or is it a short term element of cash and equivalents. If it’s long term, then it would probably be more correct to include the amount in the “Financing” section of the Statement of Cash Flows rather than as a Cash and Equivalent amount
hi all. thanks Mike, nice lecture as i seem to understand whats happening. I’ve got one question Mike,
how do you work out the increase in receivables, am i wrong to assume its $ (584 – 492) = $92
also in your answer at the back of the text, cash equivalents c/f are worked out as 17+32-60 = $(11) the bank liability is included in the working. please advise as i can’t get around this. thanks for the effort.
Can someone help me with the treatment of interest under operating cash flow please?
In Kaplan exam kit some of the answers do not add interest expense and then deduct it but instead they just deduct it, so my question is when do I add and deduct and when do I simply deduct it? Is there something in the question that need to watch out for?
The start point is pbt. If interest has NOT been deducted in arriving, but the start given is pbit, then we need to deduct interest to arrive at pbt. That’s the top figure in the cash flow.
One of the first things we then do is add the interest back – the same figure we have just deducted.
Then we need to calculate the amount of interest actually paid and deduct that as Cash paid in the operating activities of the Statement of Cash Flows
Does that clear it up for you?
Thank you very much Mike. It really helped, I’ve compared few question and answers they now make sense. Thank you again.
Thank You very much Mike for your Teachings. Being listening to the Lectures and I understand it clearly.
Good, and good luck with F7 exam
In SCF, which profit figure to be used, Profit before Tax or Profit before Tax & Finance Cost?
what is the difference between cash and profit?
I’ve just sold my car for $10,000
How much profit have I made?
Can you confirm that you are genuinely an F7 student?
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dear lecture is the layout of statement of cash flow will be given in the exam?
@niko123, Why on this Earth would it be? A simple answer to your question is “No”. A fuller answer involves some words which I would rater not use in the public domain!
@MikeLittle, sorry Mike for this stupid question
can someone teach me how to get the revaluation amount of $110,000?
thanks a lot.
@valenyap86, In the Statement of Financial Position, per the question, in the Equity section, third line, you’ll see the words “Revaluation surplus”. If you move your eyes to the right along that line, you come to the figures “150″ and “40″
Now, by deducting “40″ from “150″, you arrive at “110″
Does that answer it for you?
@MikeLittle, yes, thanks …!!
Pristine! I had the same question and I’m glad I found it without asking.
An ‘awefully’ (punning to an F4 lecture of yours) good lecture, this.
Thanks so much, Mike.
hello, good example but I’m confused about one thing…in arriving at the figure of (239) for purchase of investments, why is the 32 taken away from to get 364…..isn’t that 32 related to the receivables?
@r2d2, never mind ……it WAS in the investments ….shux!
I have noticed in the notes I printed that investments in 2009 are 396
in your answer they are 364.
it stumped me for ages….
@aardvark, But are you ok now?
Can you help me with the “1 for 4 bonus” part? I don’t get it why it is valued at $75,000 from the share premium account. Thanks.
@alextrunghuynh, Ok … what’s the problem? The calculation to arrive at 75,000 or the fact that the debit entry has gone to Share Premium? ( The credit entry has gone to increase the Share Capital from 300,000 to 375,000 )
If the problem is the calculation of 75,000 that’s easily sorted! How many shares were in existence at the date just before the bonus issue? Last year’s shares brought forward = 300,000. A “1 for 4″ bonus issue means that, for every 4 shares you previously held, the company will give you 1 more share. So, for 300,000 shares there will be an additional 75,000 shares issued as bonus shares.
If the problem is “Why the Share Premium Account” it’s because there are only four allowable uses of the Share Premium, and the most valuable one – where you can use up the greatest amount of Share Premium. So, we’ve calculated 75,000 and I’ve explained WHY the Share Premium Account. The double entry to record the bonus is therefore is Debit Share Premium Account and Credit Share Capital Account. The entry will be recorded in the Statement of Changes in Equity
@MikeLittle, Yes indeed. Thank you. I really appreciate it.
maybe I am having blonde moments. I accessed the lecture where can I get the questions, ZETA. I have been doing the revisions based on ACCA past papers but on this one I do not KNOW where the ZETA question is , please help
Really very good example 6 ALL IN ONE. moreover, for better understanding the whole cash flow. if your double entry is very strong.
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