15 – B.6. Top-Level Planning and Analysis

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  • #230338
    Stylianos Vourderis

    Why didn’t we calculate capitalized depreciation and the amounts to allocate in COCS, inventory, SGA

    when we prepared the actual Cash Flow Statement in Section A ?

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  • #230346
    Lynn Roden
    HOCK international

    Hello Stylianos Vourderis,

    It is true that you do not see any mention of that in Section A in the instructions for preparation of a Statement of Cash Flows. The segregation of depreciation that is needed for a manufacturer using absorption costing is a refinement that is not covered in Section A. And if a company is not a manufacturing company, it will not be an issue. It is absorption costing used by a manufacturer that creates an issue with depreciation.

    And frankly, the segregation of depreciation is an advanced topic that will probably not be an issue on any exam questions you will receive. It is something to be aware of, but you will probably not need to know it for the exam.


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