Fund flow statement

1701 views 5 replies

Guest

In question of fund flow statement we are given comparative balancesheet in which values of asset and liability of current year and previous year are given . If value of any asset say land & building in current year is Rs4,00,000 and in previous year it is Rs4,35,000 .and there is no additional information given for same.what I should assume for preparing fund flow statement that a portion of land and building is sold out or deprecited.(in absence of additional information) becouse its accounting treatment are different

I have two option that if Treat that that portion of L&B is sold out it become source of cash in fund flow statement and if i assume that that portion is deprecited then it will come under sources of cash inflow under head funds from operation but its accounting treatment is different.Please help me ?

Replies (5)

CA Manish

Job

5264 Points Posted on 08 October 2012

It should be taken as depreciation.

ramcharan

articled assistent

367 Points Posted on 08 October 2012

Since it is a question whith out much information you can assume any thing you may think as it

1)you may take it as sale of land&building

2)permanant decline in value of the land and builing (since it is a land and building it is not a good practice to have depreciation to Land & building)

ramcharan

articled assistent

367 Points Posted on 08 October 2012

But make sure that in your assumption mention that " SINCE NOTHING IS MENTIONED I AM ASSUMING IT TO BE A PERMANT DECLINE AND THAT IS AS PER GUIDELINES PRESCRIBED BY ICAI AS-10"

Guest

I have read your Ramcharan`s comment tell me that is our answer for this question is remain same when we take it in computing solution as permanent decline in value and when we take it as a portion of L&B is sold out