VUELVE (CA- Student) (351 Points)
06 April 2010Details as per Balance Sheet :
Fixed Assets: 31.03.2005 31.03.2006
Land --- 4,80,000 --- 9,60,000
Building & Equipment ------ 36,00,000 --- 57,60,000
Accum. dep ---- 12,00,000 ------ 13,20,000
The original cost of equipment sold during the year 2005-06 was Rs.7,20,000/-
Details as per P&L Account:
Dep. as per P&L ---- 6,00,000
Profits on sale of equipment ---- 1,20,000
Please show the adjustment for the purpose of Cash Flow.
Thank You..!!
Dear Justin,
For the above adjustments you have to prepare 3 accounts namely- Land A/c, building & equipment A/c and Accumulated Depreciation A/c…
Land A/c
|
To Bal. B/d 480000 |
By bal.c/d 960000 |
|
To bank(purchase) 480000 {b.f} |
|
|
Total 960000 |
Total 960000 |
Building & equipment A/c
|
To bal. b/d 3600000 |
By bank (sale) 240000 {720000 cost- 480000 dep} |
|
To bank (purchase) 2880000 {b.f} |
By Accumulated dep A/c 480000 |
|
|
By bal. c/d 5760000 |
|
Total 6480000 |
Total 6480000 |
Accumulated Dep. A/c
|
To Building & equipment 480000 { t/fd. To building a/c} [b.f] |
By bal. b/d 1200000 |
|
To bal. c/d 1320000 |
By p&l ( current year) 600000 |
|
Total 1800000 |
Total 1800000 |
Now you have to disclose these adjustments to different places of CFS.
1- Purchase of Land(480000) will go to cash outflow in investing activity.
2- Purchase of building & equipment(2880000) will go to cash ouflow in investing activity.
3- Sale of building and equipment(240000+120000) will go to cash inflow in investing activity and its profit of 120000 will also be deducted from n/p before tax in order to get operating profit before working capital changes…
4- Current year dep. Of 600000 will be added to n/p before taxation to get operating profit before working capital changes…
CAclubindia
