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Statement of Cashflow – PPE T-account

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September 25, 2021 at 6:35 am #636433
ty0311
- Topics: 17
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Hi Chris,

I was just going through you lecture on the intro to Statement of Cash Flow (Chapter 4).

To check that I have the correct understanding, the PPE disposal value that appears on the credit side to the PPE account is the same value as the ‘Proceeds’ within the calculation “Profit/Loss on Disposal = ‘Proceeds’ – Carrying value’

Is this correct?

Thanks and Regards,
Tim
September 25, 2021 at 9:05 am #636449
P2-D2
Keymaster
- Topics: 4
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Hi Tim,

Yes, that would be correct. We remove the carrying value from the T-account (the credit entry), the proceeds are shown as a cash inflow and the profit/loss on disposal is adjusted as a non-cash item in the operating profit reconciliation.

Thanks
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