Cash Flow

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

                                                         Building & equipment A/c

                                                   Accumulated  Dep. A/c

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…

agree with faiz