Non cash items

This query is : Resolved

CA Sanjay Baheti (Querist)
Follow

24 July 2012 In case of Company's Accounts as per Companies Act,1956 How do you define the term "Non cash Items" for the purposes of computing Cash profits/(Losses) after adding/deducting from Book profit/(Loss) as per Profit & Loss Account. I mean what the said term includes. for example Depreciation.
Please provide the illustrative list so far the term "Non cash items" includes is concerned.

Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)
Follow

24 July 2012 Any debit or credit which is notional and no established cash obligation / outflow, is non cash item. This therefore does not include provisions debited in profit & loss account as they are similar to creditors.

Examples of Non cash items include:
1. liability/loan converted to equity
2. assignment of receivable and payables with third party.
3. Depreciation / amortisation
4. MTM of derivatives
5. Forex MTM
6. Impairment losses and reversals.
7. Converting receivables into ICDs (shift from operating to investing activity)