Disposals in DFS

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jewels.p
jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
Is it only in Cash Flow Statements in the Exam that we may need to calculate the Purchases of PPE's?

I have had it explained to me on here before how to do it but I just cant get it in my head an easy way to remember. I know I did it in FRA and managed it ok but now for some reason I have completely lost it on this.

What is the easiest way is it a T account or what?

Thanks

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  • Steve Collings
    Steve Collings Registered Posts: 997 Epic contributor 🐘
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    You will need to calculate the additions to PPE which is basically:

    Book value PPE b/fwd (from prior year SoFP)
    less
    NBV of PPE sold (per Q)
    less
    Depreciation charges (per Q)
    less
    Book value of PPE c/fwd (current year SoFP)
    Equals
    Balancing figure = additions.

    Lots of students find it easier to do a T a/c but others just do a simple calc (as shown in model answers).

    You might also be asked to calculate the proceeds from disposal of PPE which is basically NBV of PPE sold add profit or deduct loss to arrive at proceeds.

    Regards
    Steve
  • Esme
    Esme Registered Posts: 711 Epic contributor 🐘
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    What is PPE?
  • Rinske
    Rinske Registered Posts: 2,453 Beyond epic contributor 🧙‍♂️
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    Esme wrote: »
    What is PPE?
    I thought it was property plant and equipment, but now start to doubt it.
  • AK002
    AK002 Registered Posts: 2,492 Beyond epic contributor 🧙‍♂️
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    Rinske wrote: »
    I thought it was property plant and equipment, but now start to doubt it.

    It is lol.
  • NO BUSINESS CASE
    NO BUSINESS CASE Registered Posts: 85 Regular contributor ⭐
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    Hi Jewels,

    I know what you mean but for me there is an easier way to go.

    If like past papers it is split into cash from operations as 1 question including tax and finance costs, followed by cash from investments and then financing as the other then put in what I call the easy stuff such as increased loans and share capital plus any sale proceeds and then with a little bit of a luck you will have at least a balancing figure to work towards for the PPE which should be your only thing o/s.

    Haven't got my paperwork with me but think it goes B/fwd figure MINUS depreciation charge MINUS nbv of any disposal (usually just the one) PLUS PPE expenditure = carried forward figure.

    Mind you I am turning into a bit of a nervous wreck as the 1 month to go sign looms into view!!!
  • Clare Finch
    Clare Finch Registered Posts: 40 Regular contributor ⭐
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    Hi there,

    Iif you are using 'A students guide to IFRS' to supplement your DFS studies page 40/41 shows the PPE working done both ways ...either as a column like suggested above (page 40) and the same working done as a T account on page 41.

    Some students prefer the column, some prefer the T a/c..it is personal preference...both give the same answer...

    You have to be making a decision though what you plan to do and then stick to it...

    Good luck in June

    Clare (Finch)
  • jewels.p
    jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
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    Thanks everyone. I think that is where I am getting myself confused Clare I am trying to remember the different ways of doing it and getting muddled up.
  • Clare Finch
    Clare Finch Registered Posts: 40 Regular contributor ⭐
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    Jewels, you are not on your own...every example seems to do it differently!

    but when the penny drops and you pick one method and stick to it, cash flows can be your best question..they are very logical..

    Consolidated SOFP is the same...you need a method (there are so many here!) stick to yours and they all start to be actually quite easy....

    Good luck for June

    Clare
  • jewels.p
    jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
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    Jewels, you are not on your own...every example seems to do it differently!

    but when the penny drops and you pick one method and stick to it, cash flows can be your best question..they are very logical..

    Consolidated SOFP is the same...you need a method (there are so many here!) stick to yours and they all start to be actually quite easy....

    Good luck for June

    Clare

    Thanks Clare. I like your optimism about it becoming easy. I think I know all the calculations for consolidations but then I ALWAYS miss something out on the SOFP!
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