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cash flow

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › cash flow

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by MikeLittle.
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  • November 20, 2015 at 7:56 pm #284225
    jingdong
    Participant
    • Topics: 82
    • Replies: 103
    • ☆☆

    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 thanks

    November 21, 2015 at 2:59 pm #284333
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22699
    • ☆☆☆☆☆

    If 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 20

    Investing activities

    Cash purchase of new assets 400
    Cash proceeds of disposal Nil

    I 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 150

    Total 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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