# Cash flow - when to calculate depreciation and when not

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Registered Posts: 528 Epic contributor 🐘
I am getting blurred revising all day but tripped on this before.

When do you calculate the depreciation for the reconcilation and when not? Is it always the figure stated for the year in the income statement even though there was a disposal?

As you can see I'm confused.
It's osbrone work book exam 3.

nbv non current assets 2003 = 2376 2004 = 4282 disposal nbv 9,

dprn stated as 2003 = 475 = 2004 856

I wanted to work out the depn and the acqusitions using the depreciation I'd calculated.

• Registered Posts: 585 Epic contributor 🐘
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reddwarf wrote: »
It's osbrone work book exam 3.

nbv non current assets 2003 = 2376 2004 = 4282 disposal nbv 9,

dprn stated as 2003 = 475 = 2004 856

May be you have worked too hard today and you need to take a break

The cash flow you are workng is for yaer 2004. Therefore the depreciation expense for 2003 is irrelevent.

closing bal of 2003 becomes opening balance for 2004

workings

o bal...............................2376
less assets sold.....................9
Less Depreciation (2004)......856 (add back to net profit)
Less Closing balalnce .........4282

equals Net Purchases.........2771 (cash out flow)

Note:

Generally speaking you will be given Depreciation figure in the question therefore you are expected to work out net cash purchases of assets.

If you are not given Depreciation figure but you are given "net cash purchases of assets" figures, then you are expected to work out Depreciation figure. You will need this figure to add back to the operating profits
• Registered Posts: 528 Epic contributor 🐘
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Of course - thanks sdv.