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It is added back in because it is an accounting expense, not a cash expense. So when you break down a Statement of cash flows you have three parts; Cash flow from operating activities (Think selling of goods), cash flow from investing activities (Think fixed assets) and cash flow from financing activities(Getting a loan, or issuing stock). We depreciate fixed assets (except for land, unless we are taking into account something like the amount of coal in coal mine). However like stated before, depreciation isn't a cash expense and if we look at an Income Statement we see that depreciation is one of the first things subtracted from the Income Statement balance and skews the Income statement. Hence the Statement of Cash Flows. So again, just think of it this way; it was money that was never really spent, so we need to add it back in.
Hope you are able to see what I'm getting at, sorry if I made it hard to follow or was to redundant.
What else can I help you with?
What is journal entry if fixed assets lost by theft?
debit loss of assetcredit fixed asset
How do I journalize entries for trade of fixed asset?
This is for any operational asset Debits New asset(fair value) Accumulated depreciation(account balance of old asset) Boot(cash received if any) Loss(if any) Credits Old asset (Account balance, NOT BV) Cash paid(if any) Gain(if any)
What is the profit or loss on sale of fixed assets?
In cash flow from operating activities in cash flow statement, loss on sale of asset is included to net profit to arrive at cash flow from operating activities and shown under cash flow from investing activities as this is part of investing activities but in normal net income it is shown as an adjustment which needs to be adjusted to arrive at cash flow from operating activities.
What is fixed assets register in accounting?
The fixed asset register is a way of recording and tracking all the fixed assets that the a company owns. This helps to identify loss of assets through theft or carelessness, provides a place where deprecation can be calculated and details of insurance
What is sale of fixed assets?
Fixed assets are the assets of business concern. The value of these assets, except land, gets depreciated year by year and the allowance of such depreciation is availed for tax exemption purposes on a regular basis. When such the assets are sold for a consideration, it is called the "sale of fixed assets" and the gain / loss on sale of such assets is assessed based on the written down value as on the date of such transaction.
Under what heading would fixed assets show on a profit-loss account?
They do not reflect in the profit loss account at all.
How to do a Fixed assets reconciliation?
Reconciling fixed Assets Opening balance of fixed assets (last year closing) Plus all FA additions during the financial year Add(subtract) any gain (loss) on revaluation subtract Depreciation for the Financial year subtract disposals
Where does land go in the profit and loss account?
land goes on the balance sheet under fixed assets :)
What is sales of asset?
Fixed assets are the assets of business concern. The value of these assets, except land, gets depreciated year by year and the allowance of such depreciation is availed for tax exemption purposes on a regular basis. When such the assets are sold for a consideration, it is called the "sale of fixed assets" and the gain / loss on sale of such assets is assessed based on the written down value as on the date of such transaction.
What is the journal entry for lost of fixed assets?
debit loss of assetcredit fixed asset account
What is the journal entry to write off fixed assets?
When the Company decide to write off the fixed asset, the following entries will be passed:Dr. Accumulated DepreciationDr. Loss on Asset written off (if any)Cr. Fixed Asset ( at cost)The company would write off the fixed asset in the following circumstances:1) The company may write off the fixed asset, if the assets are no longer in feasible use.2) The fixed assets have been fully depreciated.In case 1 above, the company might incurred a loss on fixed asset written down if the net book value is > nil. Whereas, when the assets have been fully depreciated ( as in case 2), no losses will be incurred upon written off.
Sale of fixed assets go on the income statement?
No profit or loss from sale of fixed asset goes into income statement while the cash proceeds goes to cash book.
