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sir in video 22 of cashflow statement u named loss in sale of fixed asset as add financial activity in operating part but even though it is financial activity item its also non cash right sir so we are not going to anything with that even in financial activity part of calculation so wouldnt that be better if we mention it as a non cash item and add the loss back. so can i do that. thanks for clearing my doubt in advance sir Video Details ------------- P1 - Advanced Accounting - Without AS AS 3 Cash Flow Statement #23. Illustration 9
Answers (6)
CA Suraj Lakhotia Admin
Loss on sale of fixed asset is not a financing activity. It is a part of investment activity hence added back to net profit. There is a cashflow that you receive when you sell a fixed asset. Your question is slightly not clear. Can you reframe it.
sorry sir as u said it is investment activity i was trying to say that regardless of what type of activity it is the loss is no cash flow item so can we mention it as "non cash item" and add it back because in the class you named it as "investment related loss on sale of asset" in the operating activity part of calculation.
Thread Starter
N.V Karthikeyansorry sir as u said it is investment activity i was trying to say that regardless of what type of activity it is the loss is no cash flow item so can we mention it as "non cash item" and add it back because in the class you named it as "investment related loss on sale of asset" in the operating activity part of calculation.
You can think it that way as well. But say if you have profit - it’s cash flow right.
CA Suraj Lakhotia Admin
You can think it that way as well. But say if you have profit - it’s cash flow right.
yes sir if we have profit in most case we receive cash so its an cashflow but in loss we dont pay anything in that transaction right sir
Thread Starter
N.V Karthikeyanyes sir if we have profit in most case we receive cash so its an cashflow but in loss we dont pay anything in that transaction right sir
Yes the loss can be considered as a non-cash item.