Cashflow - Depreciation

No matter what magic I may try to weave, there is no combination of 290, 40 and 340 that I can arrive at a sensible explanation Are you sure that you have copied the figures down correctly? What's the name of the question - if it's a past exam question I may be able to find it on the internet

Hi Mike, No it was just a practice question. What I was trying to ask is under normal circumstances when we have incurred depreciation, we need to add to the accumulated depreciation account. Therefore: accumulated depreciation b/f – 290 (Depreciation) – 40 290 + 40 = 330 Under what circumstances will we 290 - 40 = 250 reducing the accumulated depreciation. Could this arise to revaluation etc? Thank you

It could be a revaluation but more likely it's a disposal Say we sold for $500 an asset that had cost $600 and had been depreciated by $40 so had a carrying value of $560 In the statement of cash flows we shall show in Investing Activities proceeds of sale for $500 and in the individual accounts we'll need a disposal account That will be debited with the $600 cost that we are getting rid of, it will be credited with the depreciation of $40 and it will be credited with $500 proceeds That leaves us with a loss on disposal of $60 and that loss will be added back in the Operating Activities section OK?