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What is the treatment of revaluation of assets in a cash flow statement?
In a cash flow statement, the revaluation of assets is not directly included in the cash flows since it does not involve actual cash transactions. Instead, it typically affects the balance sheet and the income statement through changes in asset values and potential gains or losses. Any resulting gains or losses from the revaluation may impact net income, which is then adjusted in the operating activities section of the cash flow statement through reconciliation. Thus, while revaluation itself doesn't appear as cash flow, its effects are indirectly accounted for in the cash flow adjustments.
What is realized and unrealized swap?
Realized swaps refer to the actual gains or losses that occur when a swap contract is settled or terminated, reflecting the cash flows exchanged between parties. Unrealized swaps, on the other hand, represent the potential gains or losses that exist on paper due to changes in market conditions, but have not yet been settled or realized through a transaction. Essentially, realized swaps impact current financial statements, while unrealized swaps may affect future financial positions.
What is a cash flow hedge?
a cash flow hedge ia an instrument designated as hedging the exposure to variability in expected future cash flows attributed to a particular rick. gain/losses on the effective portion of a cash flow hedge are deferred and are reported as a component of other comprehansive income (outside earning) until the cash flow associated with the hedged item are realized. gains/losses on the ineffective portion of a cash flow hedge are reported in current income.
What does turtle mean by the expression paper losses...doesn't mean anything?
In the context of investing, "paper losses" refer to losses on investments that have not yet been realized through a sale; essentially, they are hypothetical losses on paper rather than actual cash losses. When Turtle says "paper losses... doesn't mean anything," he suggests that such losses shouldn't be a cause for concern unless the investor decides to sell the asset. It emphasizes the idea that market fluctuations are normal, and the true measure of an investment's success is realized gains or losses, not unrealized ones.
How does Sale of a non-current asset on credit at its net book value affects Working capital?
Easy when a non asset is sold any gains/losses have to be put in the income statement and therefore the disposal is put in the net income in the cash flow statement.
Should unrealized capital or gain be included in calculation of return?
Unrealized capital gains or losses should generally not be included in the calculation of return, as they represent potential future gains rather than actual realized profits. Return calculations typically focus on realized gains, which reflect the actual cash flow generated from investments. However, including unrealized gains can provide insights into the overall performance of an investment portfolio and its market value over time. Ultimately, the choice depends on the context and purpose of the analysis.
Why is unrealized gain and losses not included in net income?
Unrealized gains and losses are not cash involving transactions that's why while making cash flow from operating activities, net income is adjusted for these kind of non-cash items.
Where would the event purchased land for cash appear if at all on the indirect statement of cash flows?
Definition of 'Cash Flow From Investing Activities'An item on the cash flow statement that reports the aggregate change in a company's cash position resulting from any gains (or losses) from investments in the financial markets and operating subsidiaries, and changes resulting from amounts spent on investments in capital assets such as plant and equipment. As per above mentioned definition, purchase of land will be appear in investing activties under indirect as well as direct method of Cash Flow Statement.
Can dividends be declared from unrealized gains?
No, dividends cannot be declared from unrealized gains. Dividends are paid out of a company's retained earnings, which are derived from actual profits that have been realized. Unrealized gains represent potential profits on investments that have not yet been sold or converted into cash, so they do not contribute to the company's available cash flow for dividend distribution.
Why are the financial statement users interested in the statement of cash flows?
it enable both internal and external to know that the company worth, the company is heading for losses.
What are realized revenues?
REALIZED REVENUE-A revenue transaction where goods and services are exchanged for cash orclaims to cash.
Is it realized or unrealized gain or loss while revaluation on cash balance in foreign currency according exchange rate?
It is an unrealized gain / loss. It is a restatement of the value of a balance in a certain currency, in relation to the base currency of the balance. Realized gains / losses are for 'finalized' transactions, such as outstanding vendor amounts paid or customer amounts received and there is a loss or gain realized at that point. (this happens when there is a big fluctuation between the date the transaction is executed and the date the money changes hands)
