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Foreign exchange gain CSOCF

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Foreign exchange gain CSOCF

  • This topic has 2 replies, 2 voices, and was last updated 1 year ago by Stephen Widberg.
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    Posts
  • March 22, 2021 at 5:14 am #614938
    tinkle
    Member
    • Topics: 50
    • Replies: 43
    • ☆☆

    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

    March 22, 2021 at 5:37 am #614940
    tinkle
    Member
    • Topics: 50
    • Replies: 43
    • ☆☆

    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….

    March 22, 2021 at 3:56 pm #614974
    Stephen Widberg
    Keymaster
    • Topics: 12
    • Replies: 2843
    • ☆☆☆☆☆

    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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