Question

how to record provision for depreciation in cash flow statement?

Answer 1

Hi Elis

Provision for depreciation is not recorded in Cash Flow Statement as it does not involve any flow of cash. Moreover, it is given to determine the value of depreciation charged during the year (or the value of fixed asset purchased during the year).

As we know, we deduct only the depreciation charged during the year from the net profit while preparing Profit and Loss Account, thus, depreciation for a particular year will be added to the net profit in order to adjust the non-cash expenses.