Page 272 - F3 -FA Integrated Workbook STUDENT 2018-19

Chapter 19

3.3 Cash flows from investing activities

Cash inflows may include:

 interest received

 dividends received

 proceeds from disposal of property, plant and equipment

Cash outflows may include:

 cash paid for purchase of property, plant and equipment

For interest and dividends received the cash flow should be calculated by
reference to the income for the item (shown in the statement of profit or loss) and any
opening or closing balance (shown in the statement of financial position).
A T-account can be used to help with calculations.

For property, plant and equipment accounts the following T-accounts will usually
be required.

 cost account

 accumulated depreciation account

 disposal account (to calculate/confirm all elements of the profit or loss on
disposal)

Note that it is often possible (and quicker) to prepare one T-account working for PPE
based upon net carrying amount, rather than separate workings for cost and
accumulated depreciation.

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