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

Kappa Co's statement of financial position shows: land and buildings carrying amount $500,000 at 1 January and $620,000 at 31 December. The revaluation surplus rose by $50,000 due to a revaluation in the year. Depreciation charged was $20,000. There were no disposals. What was the cash paid for additions?

Cash paid for additions is $90,000. The revaluation of $50,000 is non-cash, so it must be removed from the carrying amount movement, and depreciation of $20,000 added back: 620,000 - 500,000 - 50,000 + 20,000.

  1. A$70,000
  2. B$90,000Correct
  3. C$140,000
  4. D$120,000

Explanation

Closing 620,000 = opening 500,000 + revaluation 50,000 + additions - depreciation 20,000. Additions = 620,000 - 500,000 - 50,000 + 20,000 = 90,000. Ignoring the revaluation gives 140,000; 70,000 subtracts depreciation wrongly.

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