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Hi Tutor
I am looking at cashflows and I got stuck in question ( Adnash) in the complete text of kaplan, I dont understand how they worked out the goodwill. I use T accounts and dont understand the solutions, i dont think the balance b/f and c/f has taken into account.
Can you please let me know how it would be shown in a T account.
Also for working 1, ( Profit b4 Tax) is £400, is it necessary to do adjustments for associates profits and impairment of goodwill? as you will be taken that into account and adding it back again.
is there any dividends recieved for this question. i thought £49m were recieved and £10m cash pd, income from associate 1m, giving a balancing figure of £61m.
Will you be in the university any time next week?
Thanks,
Karen.
Which University? Do I know you?
If you are given a profit before tax figure, but it is not yet finalised because, for instance, the company has not yet accounted for its share of the associate, then, yes, you should adjust the draft pbt for the share of the associate in your workings to arrive at a corrected pbt, then deduct the share of associate in the statement of cash flows because it’s non-cash.
It looks like the only dividends paid were 50 by Andash and 20 to the nci by Broiler
OK?
Hi Tutor,
What about the impairment £78 how did they calculate that out as I dont understand the solutions in the kaplan book od adnash?
Also for cashflows I dont understand what they mean by no cah items and cash items. i.e why increase in recievables you minus this in the cashflow.. and decrease in payables you drcrease it?
I go to glasgow caledonian university.
Thanks,
Karen
Hi Karen
Only half an answer until I get hold of a copy of the revision kit tomorrow – so post again when you’ve read this so I can see that I have a question outstanding
Ok, receivables and payables. Today I don’t owe you any money. Tomorrow you give me £1. What has happened to your receivables? And what has happened to your cash?
Now think of it from my point of view – what has happened to my payables? And what has happened to my cash?
When I pay you back, my payables decrease – and what happens to my cash? That also decreases
So, an increase in receivables is an outflow of funds, and increase in payables is an inflow of funds
OK?
My recievables have increased and my cash has decreased, so this is an outflow yeah?
Your payables have decreased and your cash has increased, this is an inflow I take it?.This exam is really hard, I dont think I can pass it, as the IAS/ IFRS standards are really hard to understand.
Thanks,
Karen
Hello
I am doing this question Jocatt pass paper 2010 cashflow. I dont understand why they had debited the gain on rmeasurement, should this not be a credit, also current cost of 16 this should be debited as it is not giving rise in the defined benefit.
Also for financial assets I dont understand why they have included the 5m cash in there?
“So, an increase in receivables is an outflow of funds, and increase in payables is an inflow of funds”
The explanation is in my original answer but, if you can’t see the logic of it, simply remember the “rule”
The 16 retirement benefit add back is because, although it is an expense needing to be adjusted, it’s a non-cash item …. so needs to be added back to pbt
The gain on re-measurement will have been credited in arriving at pbt – but it’s non-cash so now must be deducted from pbt
The 5 outflow for financial assets is to record the CASH element of the movement on the Financial Assets figure
OK?
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