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is it like depreciation- just to be added on the top?
If Provision is made regarding to Depreciation then what i remember no adjustment is required but Warranties and others only the increase is adjusted in Cashflow, it shows that you have cleared certain warranties and paid for them.
Hope it helps
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how can an increase in provision show that it has been paid..a decrease from the previous year will probably mean that and then u can deduct that amount from the cashflow.. and yes it has to be added back in line items.i think..but only if it says that the provison figure has been deducted in arriving at the profit before tax figure
Remember the mantra:
“Brought forward, Income Statement, Carry forward, Cash”
Take the provision figure from last year, add ( or deduct ) the I/S entry in respect of that provision, deduct the carry forward figure and the difference MUST be cash paid.
So, add back ( or deduct if it was a credit in the I/S movement ) the Income Statement charge in arriving at Op Acts flows, and then deduct – probably from Op Acts the amount you have calculated as being paid
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