ACCA FR Syllabus D. Preparation Of Financial Statements - Cashflow statements - Step 4 - Notes ^{7 / 9}

So in the first 3 steps, we have turned the Income statement into cash and placed it into the cash-flow statement. We now need to do the same with the S - remember much of it we have already dealt with (e.g. receivables, inventory, payables, investment

Property, interest and tax payable

So let’s begin with…

PPE

We deal with this slightly differently to the income statement items in step 3:

Process to follow

Here’s the process to follow:

Write down the PPE figures per the accounts

Work out the cash element of each item (if any)

Illustration

Notes:

Depreciation in year = 50

Revaluation = 100

Disposal = Asset sold for 100 making 20 profit

Solution

The key here is to try and find the balancing figure (per the accounts) which will be additions in the year.

Note: we are dealing with NBVs.

Write down the PPE figures per the accounts.

The balancing figure is 90 and this is additions.

Work out the cash element of each item (if any):

All PPE items go the investing activities section of the cashflow statement.