Page 263 - F3 -FA Integrated Workbook STUDENT 2018-19

Statement of cash flows

Illustration 1 cont.

Key issues

(1)
Ref = normally identified from the statements of financial position.
(2)
Ref = the increase in the revaluation surplus for the year should be added to
the carrying amount of PPE brought forward. It is required only to ensure that all
movements on PPE during the year have been accounted for. It is not a cash
flow and should not be included in the statement of cash flows.

(3)
Ref = the depreciation charge for the year reduces the carrying amount of
PPE.
(4)
Ref = the carrying amount of the disposal is removed from the PPE summary
and a separate gain or loss on disposal is calculated. In this case there is a gain
on disposal of $400 (disclosed as an adjustment to profit before tax within
‘Operating activities’. The sale proceeds received of $1,300 is classified as a
cash inflow within ‘Investing activities’.

(5)
Ref = cash paid for PPE additions has been calculated as a balancing or
missing figure as all other items are known. This is classified as a cash outflow
within ‘Investing activities’.

Example 1 (parts a – e) that follows will be used throughout this chapter to
demonstrate the application of the workings required to prepare a statement of cash
flows.

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