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- February 20, 2017 at 7:13 am #373259
sofp 2005 2004
NCA 2350 1990
Investment 150 310
goodwill 100 150CA
stock 825 858
debtor 1000 903
other debtor 11 20
cash 76 –CL
bank overdraft – 47
creditors 725 653
dividend payable 70 60
tax payable 240 260
3467 3211Share capital 1700 1600
share premium 57 21
revaluation 200 –
p/loss 1300 990addtional information:
b) the company acquired additional nca on 30 june 2005 for total cost of 150,000 of which 50000 was included in total creditors and balance was paid in cash. Depreciation charged for the year equals to Rm45,000
c) Investment with a book value at 30 june 2004 of Rm37000 suffered a fall in value during the year and are shown in the draft balance sheet for 30 june 2005 at a value of Rm14000. There was no purchase of investment during the year. The fall in value has not been adjusted in the above profit/lossHow should we treat this addtional point in cash flow statement?
thanksFebruary 20, 2017 at 8:18 am #373280I can’t give you a full answer for the additional point b) – you haven’t given me enough information
However, of the cost of 150,000 for the new TNCA, only 100,000 has been paid in cash, so only that 100,000 (and not the full amount of 150,000) will be shown as an outflow within investing activities
Creditors (payables) has increased to 725,000 from a figure of 653,000 but of that increase 50,000 is accounted for by the amount still owing to the TNCA supplier so, of the movement of 72,000, only 22,000 will be shown as an increase in payables within the operating activities section of the statement of cash flows
Additional information in point c) doesn’t make any sense to me
There is a fall in the values of the investments shown on the statement of financial position to an amount of 150,000 from last year’s figure of 310,000
That’s a decrease of 160,000 but you tell me only about a fall in value of 23,000
I can only assume that:
we started with 310,000
there is a fall in value of 23,000
I can only assume that we sold investments that had a carrying value of 137,000 (but you don’t tell me about that!)
and that leaves us with investments with a carrying value of 150,000However, you DO say that the falling investments are shown at a value of 14,000 in the statement of financial position but that the fall in not reflected in the statement of profit or loss
So here’s the accounting entry:
Dr ????????
Cr Investments 23,000Where is the debit of 23,000 to reflect that fall in value?
That’s the best I can do with the limited amount of information that you have shared with me!
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