Baljit's business buys a non-current asset on 1 July 20X3 for £9000.The asset is to be depreciated over five years on the straight-line basis, assuming a nil residual value.One twelfth of the annual depreciation is charged for each full month of ownership.Baljit makes no other sales or purchases of non-current assets in the financial year ended 31 December 20X3. What is the cash outflow to be shown in Baljit's statement of cash flows in respect of non-current assets for the year ended 31 December 20X3?

Question

Quizplus · Accepted Answer

The cash outflow shown in the statement of cash flows for non-current assets would be the initial purchase price of £9000, as depreciation does not affect cash flow.

Baljit's Business Buys a Non-Current Asset on 1 July 20X3