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NOTE:
-Non current assets costing $40000, with accumulated depreciation of $25000, were sold during the year.1. Should we record $25000 as depreciation in the statement of cashflow?
2. Is $40000 recorded as purchase of Non Current Assets in the statement of cash flow under the heading of “cash flow from investing activities”?You must watch the free lectures on Statements of cash flows – you cannot expect me to type them all out here 🙂
Dears sir,
Thanks for the reply.
I do have watched your lectures on cash flows but however I do have some doubts about certain issues. For the above example, I don’t want any detailed explanation. Just explain briefly.Depreciation on assets sold does not appear in the Statement of cash flows – it is not a cash flow.
Why on earth do you want to record 40,000 as a purchase? It is the cost of the assets that were sold!
What appears under the heading of cash flows from investing activities is the proceeds of the sale (which you have not given).
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