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Neglience claim

XXiiao8y ago
in arriving at Net Cash Flow from Operating Activities there should be a deduction of the non-cash item of 200 that will have been credited in arriving at profit before taxation and also in the section for arriving at Net Cash Flow from Operating Activities there should be a cash outflow of 200 in respect of the settlement of the obligation For the above 2 sentences, is that means showed it as follow: Profit before tax xxxx Adjustment: Add: provision for neglience claim 200 Operating Profit before working capital changes xxx Increase/decrease in inventory Increase/decrease in payable Increase/decrease in receivable Cash generated from operations Neglience claim paid (200) Net cash flows from operating activities xxx Am I correct? but if I do so, it means there do not have any payment made during this year?? because the provision is made few years ago one, not current year provision. If I do so, my cash flow cannot balance ady because one add back and then one minus off so no effect on the cash flow figure.
MikeLittleMikeLittleTutor8y ago#1
"Add: provision for neglience claim 200" No - it means that the figure of 200 should be DEDUCTED - it will already have been credited in arriving at profit before tax but because it's non-cash we need to deduct it from that opening figure Try it now OK?
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