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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 !!
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
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?
I am sorry, please ignore the question
OK. Hope you’ve managed to understand it all.