Hello Sir, this is a full statement preparing question in BPP workbook,
The PPE has been revalued is that the reason to put exchange gain through the T account?
The explanation given in the book is:
''The exchange gain created a cash saving on settlement that reduced the actual cash paid to acquire PPE and it is therefore shown separately in PPE T account as a non cash increase in PPE''
can you just elaborate on this treatment for me so that I can understand better
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Foreign exchange gain CSOCF
I think I do understand what they've tried to do here, basically $270 we initially recognized PPE at that in september, then in november we settled it for $240, now after recognizing the 270 in T account and getting my answer for cash paid, I need to remove the 30, since that is non cash.
Hey also, could you pleeeaaase explain, where do I put my exchange gain/losses in PPE T account when I've got a non monetary item that uses revaluation model and the Fx gain/loss has to be included in OCI? with reference to Cashflows statement..
I understand that if it's through OCI, then ofc wouldnt be adjusting in cashflows from operations....
5y ago#2There are many possibilities add each question is different.
If you buy PPE on credit then the liability will give rise to in exchange difference which will be in the P&L. So that will have to be adjusted in the operating section cash flow. When you reconcile the PPE the 30 is as you say not a cash flow.
Anything in OC I will not affect cash flow
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