Technical Problems
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kingkongsajang says
April 5, 2019 at 12:27 pmwhy is the non-current asset account a net book value account and not the at cost value of non-current assets?
farije says
April 19, 2019 at 10:05 pmI believe because the NCA are held at Net Book Value on the Companies’s Financial Statements as opposed to Sole Traders. So the values shown on SOFP are NBV.
John Moffat says
April 20, 2019 at 8:56 amNCA’s are shown at net book value on the SOFP of both sole traders and limited companies.
The reason here that we just use one NBV account is because only the NBV’s are given in the question – so we do not know the details for the cost account and accumulated depreciation account.
ubairakhan57 says
January 7, 2019 at 7:46 pmHi Sir,
Got little questions.
1. If there is a revaluation surplus which has been added in retained earning what should we do about that?
2. Another is “dividend proposed” i guess we will not include any divident proposed usless they are paid right?
earlier response is highly appreciated i got my exam in about 10 hours.
Thank You.
John Moffat says
January 8, 2019 at 9:49 am1. A revaluation surplus is not a cash flow and is therefore irrelevant (although it is relevant in calculating the acquisitions or disposals of non-current assets because the value of the non-current assets in the SOFP will have increased because of the revaluation if it occurred in the current year).
2. Proposed dividends appear in none of the financial statements and so are not relevant.
garvit says
December 31, 2018 at 8:09 amSir don’t you think we should even deduct dividend paid from cash flow from financing activities.? we have reduced dividend paid in operating activity since it has to be shown in cash flow from financing activities.?
John Moffat says
December 31, 2018 at 8:27 amThe accounting standard gives the choice, as I explain in the lecture.
shaaliha says
December 20, 2018 at 1:54 pmHello, Sir! I just wanted to thank you for the lectures! I cant explain how much of a blessing they are to me right now!
John Moffat says
December 20, 2018 at 2:46 pmThank you for your post 🙂
haddock says
December 9, 2018 at 1:18 pmSir, why is interest paid listed under Operating Activities and not under Financing?
John Moffat says
December 20, 2018 at 2:46 pmBecause the accounting standard says that we must 🙂
kingkongsajang says
November 29, 2018 at 12:33 pmDear Sir,
why do you have to add depreciation rather than reducing it?
Thank you
John Moffat says
November 29, 2018 at 2:47 pmDepreciation is not a cash flow.
Profit is always stated after charging depreciation and so we need to add back the depreciation to get the ‘cash’ profit.
Risvy says
October 28, 2018 at 1:42 pmNow I can understand..Thank you very much for solve my problem.
John Moffat says
October 28, 2018 at 2:49 pmYou are welcome 🙂
Risvy says
October 23, 2018 at 3:50 pmI have problem with Interest..In BPP Book in Example question in Income statement Interest Received 25000, Interest Paid 75000..They show in Cash flow Interest Expense 50000 add with profit before Tax..Is that Right directly show it cash flow?? How could they do this??
John Moffat says
October 23, 2018 at 4:16 pmWithout having the question in front of me, I am pretty sure that they are not showing the 50,000 as a cash flow. What they are doing is adjusting the profit so that they have profit before interest in the cash flow statement.
The actual cash interest paid and received has to be shown separately in the cash flows statement because they are cash flows.
Risvy says
October 27, 2018 at 3:33 pmSorry Sir for late reply because your comment won’t give notification to me..However It’s really showing 50,000 as a cash flow. If you don’t believe me then if possible please check BPP Book Page 382 383 SHABNUM CO Statement of Cash Flow..Thank you for reply..
John Moffat says
October 27, 2018 at 4:02 pmWhat I wrote before is correct. They are adding the 50,000 to the profit before tax in order to get the profit before interest – not because it is a cash flow.
The cash flows are shown below ‘cash generated from operating activities’ – an inflow of 25,000 interest received and an outflow of 75,000 interest paid.
This is perfectly correct and is as I explain in my lectures.