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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?
I wish OpenTuition had a like button.
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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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