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Dear Mike, this is a question in opentuition.com mock exam, would you please help me out please.
In the context of the preparation of a statement of cash flows, the following information is relevant. PPE net book value at 31 March 2013 $910,000, PPE net book value at 1 April 2012 $720,000, new assets acquired at a cost of $ 500,000 of which $100,000 was allowed against an asset disposed of that had a net book value of $ 80,000 at the date of disposal. During the year PPE was revalued by $150,000.
How much should be shown in the investing activities section of the statement of cash flows as an outflow for purchase of new assets and profit on disposal of assets.
the answer is $400,000 purchase Nill profit on disposal.
many thanksIf you’ve given me correct information, I get the following extracts for the statement of cash flows:
Operating activities:
Add back depreciation 460
Deduct profit on disposal 20Investing activities
Cash purchase of new assets 400
Cash proceeds of disposal NilI don’t think that you’ve given me correct information!
Debit side of the PPE T account:
Brought forward 720
Cash purchases 400
Allowance for disposal 100
Revaluation 150Total 1,370
Credit side:
Carried down 910
So missing figure on the credit side is depreciation charge for the year of 460
All the figures are there for you
OK?
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