Question

How does the depreciation adjustment in OCF compare to the investment in property, plant and equipment...

How does the depreciation adjustment in OCF compare to the investment in property, plant and equipment on a statement of cash flows?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

OPERTAING CASH FLOWS : THIS IS THE CASH FLOW AVAILABLE TO THE FIRM AFTER PAYING FOR ALL THE OPERATING EXPENSES. IT IS THE CASH AVAILABLE OR USED UP IN MANAGING THE CORE OPERATIONS OF THE BUSINESS.

DEPRECIATION IS A NON CASH ADJUSTMENT. HENCE IT SHOULD BE ADDED BACK WHEN CALCULATING OPERATING CASH FLOWS FROM NET INCOME AND THE DEPRECIATION TAX SHIELD IS ADDED BACK, WHEN CALCULATED FROM THE EBITDA.

IN THE OPERATING CASH FLOWS DEPRECIAITION IS ADDED BACK AS IT IS A NON CASH CHARGE THE CASH FLOWS FORM INVESTING ACTIVITIES ACCOUNTS FOR THE INVESTMENT IN PROPERTY,PLANT AND EQUIPMENT AS A OUTFLOW OF CASH IN THE STATEMENT OF CASH FLOWS.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Here is selected financial statement data regarding a company's property, plant, and equipment. Balance Sheet: Dec....
Here is selected financial statement data regarding a company's property, plant, and equipment. Balance Sheet: Dec. 31, 2018 Dec. 31, 2017 Property, plant, and equipment $ 193,000 $ 188,000 Accumulated depreciation 75,000 37,000 Income Statement: 2018 Depreciation expense $ 58,000 Gain on sale of property, plant, and equipment 4,000 During the year, PPE with a book value of $48,000 were sold. In the statement of cash flows, the investing activities section should show a cash disbursement for "purchases of property,...
1 Balance Sheet: Dec. 31, 2018 Dec. 31, 2017 Property, plant, and equipment $ 800,000 $...
1 Balance Sheet: Dec. 31, 2018 Dec. 31, 2017 Property, plant, and equipment $ 800,000 $ 559,000 Accumulated depreciation 142,000 86,000 Income Statement: 2018 Depreciation expense $ 90,000 Loss on sale of property, plant, and equipment 19,000 During the year, PPE with a book value of $48,000 were sold. In the statement of cash flows, the investing activities section should show a cash disbursement for "purchases of property, plant, and equipment" for $ ______ 2 Dec. 31, 2018 Dec. 31,...
Assume Net Property Plant and Equipment was $1,800,000 at the beginning of the year and was...
Assume Net Property Plant and Equipment was $1,800,000 at the beginning of the year and was $1,650,000 at the end of the year. The Income Statement indicates that Depreciation Expense was $261,000 and we know plant assets were sold for $60,000 cash and a $12,000 Gain on sale of Plant Assets was reported on the Income Statement. We do not know the cash paid for purchases but we can calculate the amount.   Use the T account below to assist in...
Discuss how does the information on useful lives of property, plant and equipment of the companies...
Discuss how does the information on useful lives of property, plant and equipment of the companies meet the needs of the users of financial information.
Accounting Sleuth: Reconstructing Entries Kasznik Ltd. had the following balances for its property, plant and equipment...
Accounting Sleuth: Reconstructing Entries Kasznik Ltd. had the following balances for its property, plant and equipment accounts (in millions of pounds): Dec. 31, 2015 Dec. 31, 2016 Property, plant & equipment at cost £350 £366 Accumulated deprecation (156) (166) Property, plant & equipment, net £194 £200 During 2016, Kasznik Ltd. paid £56 million in cash to acquire property and equipment, and this amount represents all the acquisitions of property, plant and equipment for the period. The company's income statement reveals...
Describe the nature of property, plant, and equipment (PPE) and intangibles. Explain, calculate, and record depreciation...
Describe the nature of property, plant, and equipment (PPE) and intangibles. Explain, calculate, and record depreciation using different methods.
Describe the nature of property, plant, and equipment (PPE) and intangibles. Explain, calculate, and record depreciation...
Describe the nature of property, plant, and equipment (PPE) and intangibles. Explain, calculate, and record depreciation using different methods.
Adjustment for Depreciation The estimated amount of depreciation on equipment for the current year is $1,550....
Adjustment for Depreciation The estimated amount of depreciation on equipment for the current year is $1,550. Journalize the adjusting entry to record the depreciation. If an amount box does not require an entry, leave it blank.
Accumulated depreciation represents a contra-asset that reduces the net book value of property, plant, and equipment....
Accumulated depreciation represents a contra-asset that reduces the net book value of property, plant, and equipment. True or False?
At the end of 2017 the original cost (i.e., before depreciation) of IBM “property, plant and...
At the end of 2017 the original cost (i.e., before depreciation) of IBM “property, plant and equipment” (PPE) was $32,331. At the end of 2018 the original cost was $32,460. What was the original cost of the PPE that IBM sold during 2018. 2018 2017 2016 Depreciation 3127 3021 2837 Payment for Property, Plant and Equipment (3395) (3229) (3567) Proceeds from disposition of Property, Plant and Equipment 248 460 424
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT