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Dear All,
Could anyone help me clear my concerns on the solution regarding the example in the text book of Statement of Cash Flow.
In the page 347 of BPP Text Book, the line:
1 Assets
Non-current assets
B/d 1,336
Addition 90
Depreciation charge (118)
Disposals NBV (54 – 24) (30)
C/d 1,278)I cannot understand where “54” and “24” is mentioned in the question? I think it is the balancing amount.
On the separate note, what is the reason for “dividend paid” in this example categorized as cash flow from operating activities? In the similar solution in the revision kit, they categorized it under cash flow from financing activities.
Thanks a lot
Dividend paid may be shown as either an outflow from operating activities or as an outflow from financing activities.
Personally, I always show it an operating activities but, I believe, certainly some of the “BIG 4” tend to show it as financing.
Without the benefit of the BPP text in front of me, I guess that the asset disposed of originally cost 54 and had been depreciated by 24.
As a possible alternative way of giving you sufficient information, a question could have said “an asset that had been already depreciated by 24 was sold for 36 realising a profit of 6” from that you can work out that the nbv must have been 30 and therefore original cost of the asset must have been 50
Surely there must be sufficient information in the book question for you to be able to find the nbv of 30 – I don’t believe that BPP could have missed something as necessary as that
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