[教材、Notes、资料] NOTES LEVEL1 page115 No.12 account, disposal

mocha0701

1.cash flow form disposal of old asset=changes in gross old fixed-asset account +gain from disposal=80+10=90

2.cash flow from new asset=-100

total: CFI=90-100=-10

but the answer is 30-100=-70

why?

could u explain it to me?

thank u very much!!!

[em06][em06]

[此贴子已经被作者于2005-5-4 15:54:52编辑过]

kiwipig

sold for $30, this is the cash inflow $30

new fixed asset is 100. this is cash outflow 100

total cash flow is 30-100=--70 means cash outflow 70 or spend 70

original cost means how much you bought the asset ,not current cash flow.deprecation will affect the cash flow, but in our case, it is not ,because we do not depreciate te asset this year.

gain from asset disposal"in the income statement is $10 this is not useful information. means we bought asset for 80 depreciation 60, the asset book value should be 20 , we sold it for 30, so gain 10. this is not cash flow. it just reflect on income statement or balance sheet~~book value

cfal3passe

You should focus on the words" cash flow", especially cash.

in this question, you should know 30 is the real cash from the disposal, and then new fixed asset is 100, no doubt the total cash flow would be -70.

otherwise, in my opinion changes in gross old fixed-asset accounts should be the book value minus 0, so the result would be 20, not 80.

mocha0701

old fixed-asset was sold for $30,original cost is $80, the acumulated depre. is $60, which has charged to its original cost.

"gain from asset disposal"in the income statement is $10

new fixed-asset 100

thank u very much!

i am waiting for ur explanation.

cfal3passe

No CFA Level I notes in hand, would you like give me a more detailed information?