Statement of cash flows help

bobber122

Good afternoon,

Im struggling with statement of cash flows. Basically on the online practice CBT 2 for FNST at the moment 1.1 is a statement of cash flows question. I understand the reconciliation of profit from operations to net cash from operating activities. I can do everything except within the Investing activities i cannot figure out how to get the Proceeds from Disposal of of PPE and purchases of PPE.

Figures are below -

Statement of financial position -
2010 - PPE - 21340
2011 - PPE - 27890

Statement of comprehensive income -
Gain on disposal of PPE - 448

Other information -
PPE costing 878 with acc depreciation of 334 was sold in the year.
Total depreciation charge for the year was 4458.

The Proceeds from disposal of PPE answer is 992 and the purchases of PPE is -11552

How do i get these answers?

Thanks,

Jake

crispy

Hello,

PPE 2011 27,890
PPE 2010 (21,340)
6,550
Depn. 4,458
NBV of Disposal 544
Additions for Yr 11,552

Proceeds from disposal calculated as 448 + (878-334)

Hope this looks ok / helps.

bobber122

Thankyou Crispy.

Can you also help with the below -

How do i figure out on CBT 2 FNST again section 1.5 the retained earnings.

Figures are - Fenway plc acquiring 80% of Boston ltd.

Retained earnings are obviously the below

Fenway plc - 3520 (at year end)
Impairment - -200 (given in additional notes)

but then there is the part - Boston ltd - attributable to Fenway plc and i cant get this figure. What does this exactly mean?

The retained earnings of Boston Ltd are 340 at year end and the answer is 80 for the above line in the retained earnings workings. I just cant seem the get this figure.

Any help?

Thanks again,

Jake

crispy

Hello,

Is this the full question ? Is there any more info, such as value of Boston ltd's retained earnings at acquistion ?

Or maybe I am missing something, my old brain is rusty

bobber122

oh sorry, yes the value of bostons retained earnings at acquisition is 240. What else may you need?

crispy

Ah Thank you,

The 80 represents the group's share of the subsidiary's post-acquistions profits (hope this makes sense?). Calculated as: -

At Year End Boston Plc retained earnings: 340
At Acquisition they were: 240
The groups share of post aqcuisition is therefore: 100 * 80% = 80 (The 80% is simply the holding of Fenway in Boston).

bobber122

Thankyou very much for your help.

Can you explain how to deal with revaluation of assets at year end? What needs to be done? I think i know but wouldnt mind a refresher?

crispy

In a single company then: -

Dr Property, Plant & Equip.
Cr Revaluation Reserve

The revaluation reserve would appear as a seperate line in the equity portion of the balance sheet. This reserve is non-distributable (ie: you cannot pay dividends from it).

bobber122

Hi again,

Last for today.

How do i deal with intercompany transactions within the SOFP and SOCI? I understand that the unrealisable profit has to be taken out of the accounts.

Figures for example below -

a plc (who is the parent of the group of companies) sold goods that cost 120 to b plc (subsidiary) for 200 during the year. b plc sold half of these goods during the year so half remains. I understand that obviously leaves 60 in the inventories of b plc of those goods and there is also a profit figure shown in the accounts of a plc that needs to be removed.

Can you explain in all cases what would need to be done with these? Like what sort of questions may come up arising from information like that above?

Thanks,

Jake

crispy

Hi,

You are correct, you would need to adjust the consolidated income statement and balance sheet for any unrealised profits. On the balance sheet you would Dr Consol. Retained Earnings and Cr Inventory, on the Income statement you need to strip out the transaction and report from the position of the group.

I will look back at some of my old notes, and send a few questions to look at.