can anyone help with DFS queries

lgarside

1.Can someone tell me if you need to depreciate leasehold buildings in the same way as freehold buildings?

2.On the cashflow statements do you put both the profit/loss on disposal fig from the income statement in the section where you add back in the depreciation? Also Why do you add back in investment income, what is an example of this and does it get deducted somewhere else later?

Many thanks for your help

peugeot

Hi,

Yes you do depreciate leasehold buildings - they are normally depreciated over the lease term.

In terms of investment income - an example of this would be a fixed/current asset investment from which dividend income has been received. This income is added back to operating profit because it is included in the cash flow statement under 'cash flows from financing activities'.

Regards
Steve

lgarside

Dfs

Thanks Steve, does the investment income appear anywhere on the income statement? I would have thought this would have to be deducted from operating activities and then added back in to the financing section as cash received?

peugeot

Hi,

Investment income is normally shown after operating profit but sometimes (in practice) it can be shown slightly differently. As an excerpt, here is an example:

Operating profit...................................X
Loss on disposal of assets....................(X)
Finance costs.....................................(X)
Investment income..............................X
Profit before tax..................................X
Tax..................................................(X)
Profit after tax....................................X

Could you perhaps post me either on this thread or via PM the question you're looking at where investment income is shown before operating profit?

Steve