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toobasco co. S/D 18) 4)b) from the list of potential errors-iii)
sir $28m loss was deducted from net cash generated form operating activities, the examiner adds this $28m back as it is non-cash. However we should have added it twice i.e. $56m should have been added back, once to reverse the incorrect treatment by toobasco and second time to reflect the fact that its non-cash.
can you pls explain sir why the examiner only adds back $28m? and not $56m?
The XD in this question are on a foreign subsidiary – so would not have been reflected in P&L. They are an OCI item.
i have some more questions about the problems (toobasco co sep 2018):
1. The following detail included in the contents of problem: “During the year to 31 August 20X8, Toobasco made exceptional contributions to the pensionmplan assets of $33 million but the statement of cash flows”
Why in adjustment of net cash generated from operating activities for errors in the statement, why there is no deduction for contribution to pension assets plan?
2. Why the profit from associate of $4m was deducted to calculate initial cash generated from operating activites in problem, but $4m is still deducted to calculate the net cash generated from operating activities for errors in the statement?
3. Why income taxes paid of $21m is not deducted to calculate the net cash generated from operating activities for errors in the statement?IN FUTURE PLEASE PUT EACH QUESTION IN A SEPARATE POST WITH AN APPROPRIATE TITLE – THIS POST DOES NOT RELATE TO EXCHANGE LOSSES. 🙂
1. 33 already adjusted in draft cash flow in question.
2. I do not understand your question.
3. 21 already adjusted in draft cash flow in question.
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