Question 1 - Part b

In this lesson

1. 0:00 Updating consolidated cash flow for subsidiary disposal
2. 1:01 Adjusting for disposal proceeds and associate profits
3. 5:05 Removing working capital from disposed subsidiary
4. 6:57 Handling PPE disposal and depreciation adjustments
5. 9:25 Reconciling PPE balances and calculating additions
6. 13:27 Key principles for systematic cash flow adjustments

About this lesson

You'll work through the key adjustments systematically: removing non-cash items like profit on disposal and associate profits, stripping out working capital and PPE balances that no longer belong in the consolidated figures, and calculating missing cash additions. This is essential practice for Strategic Business Reporting (SBR) exam questions, where subsidiary disposals commonly appear and require careful handling to avoid double-counting assets that have left the group. The lesson walks you through a real worked example using spreadsheets and exhibits, showing you how to identify what needs adjusting and why. You'll see how to deal with proceeds from disposal (which is cash in), remove the subsidiary's cash balance that was previously consolidated, handle PPE exchanges and depreciation add-backs, and use a balancing figure to find missing additions to fixed assets. The approach is methodical: work through each area in turn, bring in everything you can calculate, and don't worry about subtotals. By the end, you'll understand the systematic process for tackling complex cash flow adjustments with confidence, even when multiple issues need correcting in the draft figures.

Duration: 15m