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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
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….There 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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