It isn't treated as an inflow, we are just adding it back to the profit before tax figure to get back to the profit from operations figure.
Thanks
P
Pilar Perona·
In example 5... why the sale of PPE is (250)? and not 250? I don´t understand why the figure is negative, when is an inflow
In example n 6.... the item was disposed for 120,000 but in the T account was mentioned 100,000.... this is the carrying value. Why?
Thanks
R
Rajaa·
hello Pilar,
If I understood correctly, the 100k on example 6 is the NBV of your machinery and that's how much you should dispose, the 120k is the cash value of the sale, therefore it should affect your cash account and not the PPE account.
I guess on example 5 the tutor was talking about the case of Purchasing another piece of equipment and how it should be shown.
I hope that helps.
Regards
K
KamleshSupporter·
Indeed I think it should be Sale of PPE with inflow of 250
It isn't treated as an inflow, we are just adding it back to the profit before tax figure to get back to the profit from operations figure.
Thanks
In example n 6.... the item was disposed for 120,000 but in the T account was mentioned 100,000.... this is the carrying value. Why?
Thanks
If I understood correctly, the 100k on example 6 is the NBV of your machinery and that's how much you should dispose, the 120k is the cash value of the sale, therefore it should affect your cash account and not the PPE account.
I guess on example 5 the tutor was talking about the case of Purchasing another piece of equipment and how it should be shown.
I hope that helps.
Regards