Question

You have received the following information:-

Property, plant and equipment (PPE) at 30 June 2020 = 800 000 carrying vale

Property, plant and equipment (PPE) at 30 June 2019 = 660 000 carrying value

Total depreciation for the 2020 year was R90 000. Plant with an original cost of R100 000 and accumulated depreciation of R60 000 was sold in the 2020 year at a loss of R5 000. Equipment was impaired by R20 000. Additional PPE was purchased and no other PPE . All purchases and sales take place with cash.

Which of the following statements concerning cash flow for property, plant and equipment in the cash flow statement for the year ending 30 June 2020 are correct?:-

i) New PPE purchased (R290 000)

ii) Cash received on the sale of plant R45 000

iii) Cash received on the sale of plant R35 000

iv) New PPE purchased (R270 000)

Select one:

a. i and ii only

b. iii only

c. ii and iv only

d. i and iii only

Answer 1

Original cost of PPE sold	100000
Less:Accumulated depreciation on PPE sold	60000
Less:Loss on PPE sold	5000
Cash received on sale	35000
Equipment
Opening Balance	660,000	Accumulated depreciation	90,000
		Loss on PPE	5,000
		Impairment loss	20,000
Cash(Balancing Figure)	290,000	Cash on sale	35,000
		Closing Balance	800,000
	950,000		950,000
So the cash paid on purchase will be $290,000
In the cash flow statement both these will be shown in Cash flow frfom Investing activities
So Option D is answer(i&iii only)