If there is the factory and there is the fire in that factory and the machine was rendered un-useable and then we sold the machine for scrap, 100,000 was the original value and 50,000 was the written down value showing on the books and the scrap value is 10,000 and from insurance company we were able to recover 30,000, and we purchase another machine to replace the machine for 100,000. How to record the transaction?
Note: This is assuming all transactions are in the same period. If Fire is in Year 1 and Recovery is in Year 2, impairment will be done in Year 1 For the sale of scrap and receivable from Insurance company the entry is Bank a/c Dr 10,000 Insurance Receivable/ Bank a/c Dr 30,000 Loss on...
Suppose we issued equity to purchase a machinery, how will it be affecting cash flow statement for the entire year?
Ther will be no direct impact in cash flow statement either in Investing activity or financing activity as there is no cash flow. However the tax sheid on depreciation which is added back to net income and it also impacts the tax paid with affects the balance of CFO. Bookmark...
How much dividend should we declare? Is there an alternative?
Dividend should be declared based on future needs of the organisation. If the company has positive NPV projects available do not declare dividend, else do. Alternatives to distribution of dividend: Buy back of shares: This comes out with advantages such as a. When the growth potential is limited they use unused cash to buy back...
Keys to effective controllership
It’s not enough to simply know the financial controller role. There are clear ways to be more efficient and effective in this position, and to move from simple data processing to trusted business partners. Here are some keys to doing this. a. Automate, automate, automate! As every accountant is well aware, recording financial transactions still...
Difference between research and development?
Research is original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding. Development is the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production...
Controller vs CFO
This is another interesting dynamic. In smaller finance teams, the controller and CFO may even be the same person.The CFO is both the leader of the finance team and a member of the executive leadership. On the one hand, they have to ensure that the finance team is well run and that everyone has all...