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Hi Sir,
Can u pls explain this question to me?
Carter, a limited liability company, has non-current assets with a carrying value of $2,500,000 on 1 December 2007.
During the year ended 30 November 2008, the following occurred:
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Depreciation of $75,000 was charged to the income statement
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Land and buildings with a carrying value of $1,200,000 were revalued to $1,700,000
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An asset with a carrying value of $120,000 was disposed of for $150,000
The carrying value of non-current assets at 30 November 2008 was $4,200,000.What amount should be shown for the purchase of non-current assets in the statement of cash flows for the year ended 30 November 2008?
A $1,395,000
B $1,895,000
C $1,425,000
D $195,000Pls explain this question to me & how I’m going to calculate it.
The easiest way is to write up a t-account showing the carrying value.
You know the brought forward figure (2,500,000), you know the depreciation, the revaluation, and the disposals, and you know the carry forward figure (4,200,000).
The purchases will then be the missing figure to make the account balance.If you watch the free lecture on Statement of cash flows you will see that I work through a very similar example doing precisely what I have written above.
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