DFS Cashflows Purchases PPE

A-Vic

Hi all

Getting confused on investing activities on the cashflow statement and getting mixed up. Can anyone explane how you work it out please?

Thanks in advance


Vic

Steve Collings

What you are trying to do here is to establish how much cash has been spent in the year on the purchase of PPE. This will involve some degree of incomplete records knowledge.

A quick formula to work this out is:

Opening NBV of PPE (from previous years statement of financial position) minus the depreciation charge in the year minus NBV of any PPE sold. Put the closing balance of PPE (NBV) on the credit side of the 'T' account, the difference required to balance the T account off is the additions figure which needs to be put into the statement of cash flows under investing activities.

Hope that helps.

Regards
steve

A-Vic

so say:

2005 NCA was 19'100 & 2006 NCA was 29'882

Deprciation charge for year was 2'172

And PPE costing 1103 with Depre of 411 was sold it would be:-

(19100-2171-(1103-411=692)=16237


13645 -missing figure and shown on statement of cash flow?

29'882

A-Vic

what was confusing me was what to do with the asset that was sold.

By the way thanks steve

sdv

FIXED ASSET REGISTER from Intermediate Level

NCA
Opening balance.............................................19100... Known figure from BS
Less asset sold nbv............................................691...work our from Gain/Loss / notes
Equals Value of assets before purchase...............18409

Add asset purchased.......................................13645 ??? work out backwards from c/bal
Total asset before depreciation.........................32054
Less depreciation.............................................2172.......Known figure from notes / IS
Closing balance..............................................29882......Known figure from BS

A-Vic

thanks STV but the way its been worked out is confusing and checked today and the figure i had was correct
(-1) the missing figure was 13646

So am confused how you have worked it out?

sdv

the formula is simple

opening NCA balance
less Assets sold
equals remaining assests brought forward
add purchases ( normally you need to work out this missing figure)
equals total of assets before depreciation
less depreciation
equals closing balance of NCA.

once you have written down thos formula

filling the figures that you know

ie- NCA opening balance, NCA closing Balance, Depreciation, Assest sold NBV (work out from your notes)

NOW you can easily work out the Assest purchased during the year

hope this helps

A-Vic

thanks stv, just learnt the formula i different way that was what confusing me

Just too many at the momment