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Finance lease at the cash flow statement

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Finance lease at the cash flow statement

  • This topic has 2 replies, 2 voices, and was last updated 8 years ago by P2-D2.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • November 25, 2016 at 5:33 pm #351487
    coop
    Participant
    • Topics: 29
    • Replies: 45
    • ☆☆

    Hello Sir,

    At the cash flow statement, the increase at the finance lease obligation from the balance

    b/f to c/f represents a cash inflow – that is ok, whereas, the new finance lease (which

    supposed to be an increase) represents cash outflows !!

    for example:

    Non-current liabilities 31 March 2013 31 March 2012
    8% loan notes 1,400 3,125
    Deferred tax 1,500 800
    Finance lease obligation 1,200 4,100 900 4,825
    –––––– ––––––
    Current liabilities
    Finance lease obligation 750 600

    Monty acquired additional plant under a finance lease that had a fair value of $1·5 million
    this date it also revalued its property upwards by $2 million and transferred $650,000 of the resulting revaluation reserve this created to deferred tax. There were no disposals of non-current assets during the period.
    Prepare a statement of cash flows for Monty for the year ended 31 March 2013

    At the answer, the new finance lease of $1·5 million, considered as cash outflow (1,500) as followings :.
    Balances b/f – current (600)
    – non-current (900)
    New finance lease (1,500)
    Balances c/f – current 750
    – non-current 1,200
    ––––––
    Balance cash repayment (1,050)
    ––––––

    my question is : why the New finance lease of (1,500) treated differently as cash outflow, whereas, the increased finance lease of (1200-900) and (750-600) treated as cash inflow?

    Thanks

    November 26, 2016 at 11:13 am #351607
    coop
    Participant
    • Topics: 29
    • Replies: 45
    • ☆☆

    I am sorry, please ignore the question

    Thanks

    November 27, 2016 at 9:58 pm #352011
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7141
    • ☆☆☆☆☆

    OK. Hope you’ve managed to understand it all.

    Thanks

  • Author
    Posts
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