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The plant and machinery of Crawley Co were shown at a carrying amoun t of $350,000 at 31 March 20X4. The comparative figure at 31 March 20X5 was $425,000. During the year to 31 March 20X5, property with a carrying amount of $4 5,000 was sold at a profit of $4,000. The depreciation charge for plant and machinery was $52,000. At 31 March 20X5 a $20,000 payable existed in relation to the purchase of plant and equipment during the year. What figure should be shown for the purchase of property, plant and equ ipment in Crawley Co’s statement of cash flow for the year ended 31 March 20X5? A $172,000 B $152.000 C $192,000 D $176,000
What should be the treatment for payable existed. Is it included in opening inventory??
This is better as you have asked me an actual question and highlighted where you are struggling. You need to adjust the additions figure calculated from the PPE T-account for the closing payable figure. To make the adjustment we will deduct the payable from the additions figure as we have not paid this amount, hence it will not be a cash flow for purchasing the PPE.
Thanks
Why is government grant amortization added In SOCF when amortization is a non-cash expense and should be added back in the cash flow reconciliation? Why is it treated as a non-cash income?
Hi,
The amortisation of the grant will be deducted in the reconciliation of PBT to cash generated from operation. It is income in the SPL but is a non-cash item as the cash will have been received in a previous accounting period, hence it has increased profit but it has not increased cash so therefore removed.
Thanks
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