Office ToDo

Non-cash adjustments on the statement of cash flows

Karl — Wed, 16 May 2012 06:40:21 +0000

As you know, in the case where you prepare your statement of cash flows using the indirect method, the operating profit you start from does include non-cash related expenses. We do mean non-cash in a way that they aren’t accrued expenses or payables on your balance sheet. The most clear example of those expenses is [...]

Changes in receivables and payables on the statement of cash flows

Karl — Mon, 14 May 2012 06:38:46 +0000

When using the indirect method for presenting your company’s cash flows for operating activities, one part of the statement also includes lines like “Changes in receivables and prepayments” and “Changes in payables and prepayments”. The keyword here is “Changes”. It’s not a direct outflow or inflow, but a change in balance. First off those changes [...]

Receiving the balance you had written down

Karl — Wed, 09 May 2012 06:36:53 +0000

Receiving the balance you had written down You had thought you wouldn’t receive the balance in full so you recognized an allowance on the balance sheet. What you had there, was the receivable balance in full and an allowance for the very same receivable. With recognizing the allowance, you also had to bear some expenses [...]

Writing down receivables on your balance sheet

Karl — Mon, 07 May 2012 06:32:57 +0000

Accounts receivable balances are subject to valuation risks and what’s more, subject to the question whether they are collectible or not. At every balance sheet date, you should ask yourself if there are any indications that the balances are not recoverable in the amount they’re recognized on your balance sheet. If the answer to the [...]

Property is being revalued shortly after acquisition – how to show it on the statement of cash flows?

Karl — Wed, 02 May 2012 04:55:42 +0000

Be it what it may – a building, machinery or other equipment – there are times when they are revalued just after the acquisition. Either valued higher or lower of the cost, the approach for the statement of cash flows stays still the same. Effectively, as we have said, the statement of cash flows shows [...]

Finance lease payments on your statement of cash flows

Karl — Mon, 30 Apr 2012 04:54:01 +0000

What a finance lease in essence is, is you buying an asset with a support of another party, that’s initially financing the purchase. Usually it’s done in the form that the financing party is purchasing the asset and is leasing it forward to you. This transaction is really common these days, however the disclosure on [...]

Donations received – how to treat them?

Karl — Wed, 25 Apr 2012 07:52:32 +0000

Specifics are always tied to events and occasions, the donations received as such are hence dependable of the business type, industry the company is in etc., however, if there is an occasion your company does receive a donation, the treatment and disclosure requirements are still more or less the same. There are some special disclosure [...]

Donations paid – how to treat them?

Karl — Mon, 23 Apr 2012 07:46:56 +0000

There may be a time and place in your business that you feel like you want to make a donation to someone. Be it whatever it is, the treatment is still the same. If the grant is just given out without any further conditions, the amount given is your expense. At the time of the [...]

Operating lease payments

Karl — Wed, 18 Apr 2012 05:14:47 +0000

In essence operating lease is something that has minimal risks – you just use the asset, pay for it and only if deemed so, have to also take care of the regular maintenance. The ownership and risks related to this however are never yours (if they were, it’d be a finance lease). All that you [...]

Initial operating lease payments

Karl — Mon, 16 Apr 2012 05:11:25 +0000

You stepped into an operating lease agreement and as you do that, you also have to pay a considerable amount as the first initial payment (something like 10 to 30% even). This payment is obviously deducted from the total of your payments hence making the monthly payment smaller. As the monthly payment is smaller, there’s [...]