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John Moffat.
John Moffat.-
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humai
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Sir in this question in estimating Arthuro Co’s forecast dividend capacity through FCF equity method why they have deducted profit on disposal of NCA? Profit on disposal of NCA does not come in FCF equity?
John Moffat
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The dividend capacity is the cash that is available for dividends.
The profit on disposal is not cash, which is why it has been subtracted. It is the proceeds that are cash and so that has been added.
humai
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If I am following below format for dividend capacity i.e
FCF equity (working 1) X
Add dividend from B co X
Less additional tax X
So deducting profit on disposal of NCA adding cash received on disposal of NCA, I should show in above format or should I show it in FCF equity working 1?
John Moffat
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It doesn’t matter where you show it in your workings (provided, as always, they are clear for the markers).
humai
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