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Charmer- Statement of cash flows Q60 Kaplan exam kit.

This topic has 1 reply, 2 voices, and was last updated 14 years ago by MikeLittle.

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November 28, 2010 at 3:30 pm #46334
ahmed1423267
Member
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adjustment (iv).
The provision for negligence claim of $120,000 has been realized and it has been deduced from profit before tax in the statement of cash flow.
Can anyone please explain me the logic behind deducing this provison from the profit and why dont we deduce $30,000 out of court settlement from profit before tax?
November 29, 2010 at 11:21 am #71900
MikeLittle
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From memory ( I don’t have the question ) it’s a provision which is no longer required and has therefore been re-credited to the I / S. But it’s non cash and needs to be deducted from profits ( it will have been added in in arriving at pbt )
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