A company is preparing its sttement of cash flows for the year ended 31 December X2. Relevant extracts from the accounts are as follows.
Statement of comprehensive income
| Depreciation | 20,000 |
| Profit on sale of non-currnet assets | 120,000 |
Statement of financial position
| X2 | X1 | |
| $ | $ | |
| Plant and machinery - Cost | 480,000 | 500,000 |
| Plant and machinery - depreciation | 255,000 | 250,000 |
Plant and machinery additions during the year were $40,000. What is the cash flow arising from the sale of non-current assets?
Suggested solutions:
| Plant & Machinery Cost | Debit | Credit |
| Opening Balance | 500,000 | |
| ADD Addition during the year | 40,000 | |
| MINUS Closing Balance | 480,000 | |
| Cost of Disposal | 60,000 |
| Plant & Machinery Depreciation | Debit | Credit |
| Opening Balance | 250,000 | |
| ADD Addition during the year | 20,000 | |
| MINUS Closing Balance | 255,000 | |
| Depreciation of Disposal | 15,000 |
Working:
profit + cost of disposal - depreciation of disposal
120,000 + 60,000 - 15,000
= 165,000
To do the same topic again in ACCA F3 Sale of Non-Current Asset Cash Flow
To do another topic in ACCA F3
2015 ACCA F3 Sale of Non-Current CASH FLOW