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ACCA Applied Knowledge · Financial Accounting · Statement of cash flows (excluding partnerships)

At 1 January, Delta Co had property, plant and equipment with a carrying amount of $400,000. During the year it charged depreciation of $60,000 and sold equipment with a carrying amount of $25,000 for $30,000. At 31 December the carrying amount of property, plant and equipment was $480,000. There were no revaluations. What was the cash paid to purchase property, plant and equipment in the year?

Cash paid for property, plant and equipment is found by reconstructing the carrying amount account. Closing 480,000 less opening 400,000 plus depreciation 60,000 plus disposal carrying amount 25,000 gives additions of 165,000, assuming all purchases were paid in cash.

  1. A$165,000Correct
  2. B$160,000
  3. C$170,000
  4. D$115,000

Explanation

Carrying amount working: opening 400,000 + additions - depreciation 60,000 - disposals 25,000 = closing 480,000. Additions = 480,000 - 400,000 + 60,000 + 25,000 = 165,000. Check: 400+165-60-25 = 480. The $160,000 option ignores nothing relevant but wrongly uses the $30,000 proceeds instead of... it is a distractor built by mixing figures; $115,000 omits adding back depreciation and disposals incorrectly.

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