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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,
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.