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Hi
Could you kindly help me to answer the below questions?
In the year end 31 december 2005 Company X brought new vehicles from company Y with a price list of $100,000 for $ 70.000 cash and an allowance against old motor vehicles of $30.000. The value of the vehicles taken in part exchange was $ 27.000
Company X sold other vehicles with a carrying value of $ 12,000 for $ 15.000 cashHow the above transactions be presented under the heading “investing activities”?
Cash inflow Cash outflow
a – 76000
b 45000 100000
c 15000 70000
d 15000 100000I am still have difficulties to answer cash flow questions even though I understood the subject. Do you have any advise that might help me to feel more confident with the questions.
Thanks
Gabbi
The answer is C, the cash flows are
Outflow 70,000 – the cash paid for the vehicles from Y, the book values are not part of the cash transacvtion
Inflow – 15,000 – the cash received from the sale of other vehicles
They are the only cash flows, the other information is to do with valuing the assets and book values, although they are relevant in a valuation sense to company X, they do not represent cash
Carl29 is correct 🙂
The only advice I can really give you is just to keep practising as many questions as possible.
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