Cash flow from investing P&E

[SriHanuman]

Why r we adding gross cost of of PE sold to the equation??:
P&E Purchased = P&E beginning -P&E end + gross cost of of PE sold.
Wouldnt the sub. beginning and the end P& E be sufficient to answer the PE purchased during a particular year.
Schwzer 2015 exam edition PG 120.

 

[Ankit Sharma]

I am not familer with the topic , but just looking at it , I can give few comments.
Take example
opening PV- 100
Closing PV- 110
. You mean to say the PV purchased = 100-110= -10
It is incorrect , as you might have purachased 150, able to sold 140 that why the remainning is 110(100+150-140)
but with your way you will get answer of 10 only

 

[Flashback]

You have to calculate an asset depreciation in period so gross cost of PPE sold is required. This is the simplest accounting way to reduce potential errors.

 

[SriHanuman]

Flashback wrote:
You have to calculate an asset depreciation in period so gross cost of PPE sold is required. This is the simplest accounting way to reduce potential errors.

Can you please give an example

 

[Flashback]

Here is the link where you can find explanations about booking entries:
http://www.double-entry-bookkeeping.com/fixed-assets/disposal-of-fixed-a...

 

[Flashback]

PPE beginning balance = open balance usual on 01/01 of assets of same kind in BS (gross by historical purchasing value, net reduced by accumulated depreciation allowance account)
PPE ending balance = beginn. balance - accum.depreciation + new asset puchased during year balances - assets disposed (sold) during year
PPE purchased = PPE beginn. balance - PPE ending balance + (asset disposed + accum. depreciation or gross cost of asset sold).