Chen plcs income statements for the years ended 31 December 2009 and 2010 and the statements of
Question:
Included in cost of sales, distribution expenses and administrative expenses, depreciation was as follows:
There were no non-current asset disposals in either year. The amount of cash paid for interest equalled the expense in both years. Dividends were paid totalling £18 million in each year.
Required: Prepare a statement of cash flows for the business for 2010.
Income statements for the years ended 31 December 2009 and 2010 2009 2010 £m £m Revenue 153 207 (76) Cost of sales (101) 106 Gross profit Distribution expenses Administrative expenses 77 (22) (20) (20) (28) Operating profit Interest payable 64 29 (4) 60 (4) Profit before taxation 25 (16) (6) 19 Тахation Profit for the year 44 Statements of financial position as at 31 December 2009 and 2010 2009 2010 £m £m ASSETS Non-current assets Property, plant and equipment Land and buildings Plant and machinery 110 130 62 56 172 186 Current assets Inventories 24 25 Trade receivables 26 25 Cash at bank and in hand 19 69 50 236 Total assets 241 EQUITY AND LIABILITIES Equity Called-up ordinary share capital Retained earnings 100 100 56 57 156 157 Non-current liabilities Borrowings – loan notes (10%) Current liabilities 40 40 Borrowings (all bank overdraft) Trade payables 37 34 Taxation 3 45 39 Total equity and liabilities 241 236 2009 2010 £m £m 10 12 Land and buildings Plant and machinery 10
Step by Step Answer:
Chen plc Statement of cash flows for the year ended 31 December 2010 m Cash flows from operating activities Profit before taxation after interest see ...View the full answer
Financial Accounting for Decision Makers
ISBN: 978-0273763451
6th Edition
Authors: Peter Atrill, Eddie McLaney
Related Video
Depreciation of non-current assets is the process of allocating the cost of the asset over its useful life. The cost of the asset includes the purchase price, any additional costs incurred to bring the asset to its current condition and location, and any other costs that are directly attributable to the asset. The useful life of the asset is the period over which the asset is expected to be used by the company. To calculate the depreciation, companies use different methods such as straight-line, declining-balance, sum-of-the-years\'-digits, units-of-production, and group depreciation. The chosen method will depend on the type of asset, the company\'s accounting policies, and the accounting standards that are applicable. The straight-line method allocates an equal amount of the asset\'s cost over its useful life, while the declining-balance method calculates depreciation at a fixed rate, typically double the straight-line rate, but the amount of depreciation decreases over time. The sum-of-the-years\'-digits method is similar to the declining-balance method, but the rate of depreciation is calculated using a fraction that is based on the useful life of the asset. It\'s important to note that the depreciation expense will be recorded on the company\'s income statement and the accumulated depreciation will be recorded on the company\'s balance sheet. This will decrease the value of the asset on the balance sheet over time.
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