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AAA OT on page 126 says:
Note that the cash flow statement should show no investment in long-term assets (and remember that it would only show payments to suppliers and employees if prepared under the direct method).I understand that above refer to cash flow statement, not forecast right? and cash flow forecast should include investment in non current asset e.g. 2 years health and safety license to sell food let’s say for restaurant chain?
Thank you,
You have to read the solution in the context of the specific question – it is a not meant to be a generic statement that is universally true. Here it is with words added to spell out the context::
“Note that the cash flow statement IN THE 2018 FINANCIAL STATEMENTS should show no investment in long-term assets BECAUSE THERE IS NO CAPITAL EXPENDITURE IN THE 2018 FORECAST.”.
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