Fixed assets classified as operating activities in the statement of cash flows

[gxtsoft]

Previously, the software classified fixed assets as investment activities when using the indirect method to generate the cash flow statement; however, in an update that changed and now it includes them as part of operating activities. I do not agree with this accounting treatment, but I also respect those who do so. What would be practical here is for the user to have the possibility of configuring the system according to their preferences and not for a particular accounting treatment to be imposed, tailored to a group of users.

I invite you to read paragraph 16 of IAS 7 just in case. That is the technical basis that I am applying in my proposal.

I would expect a solution to what happened.

[Manager_User]

I agree that Fixed Assets should be classified as Investment Activities.

@lubos Why was this changed?

Anyone know the why you would classify Fixed Assets as Operating Activities?

[gxtsoft]

I wish the option was configurable and not that the software imposes a classification. Solving this manually entails a lot of work for the user. The computer system is supposed to make life easier and thinking about solving this manually is not practical in these times.

In fact, previously the direct method was already imposing the classification of fixed assets in operating activities, but it was easy to solve it by extracting that data through the indirect method and then extracting the amount of the total operating activities. But I repeat, these are manual processes that can be avoided for the user. I hope the proposed solution is user-friendly, regardless of the classification criteria (operation, financing and investment). Let the user choose how he wants to classify it and that’s it.

[Manager_User]

What version did you start to notice this on? And what was the version you were using before you noticed the change?

[AJD]

Changes were made 18 days ago. See these posts:

Cash flows classification

Please have a look how Cash Flow Statement looks like in the latest version (24.8.2) Direct and indirect method will produce consistent reports.

Direct Method Cash Flow Statement not reporting correctly

OK. The total for operating activities (and thus totals for all activities) must be the same for both methods. I will need to fix the implementation of Direct method. I consider Indirect method to be the correct one.

Also see this post regarding proposed solution:

Cash flows classification

I came to conclusion that cash flow statement should not be looking at underlying accounts behind receipts / payments linked to invoices. Mostly because it adds another layer of complexity and makes it more difficult to see where the figures are coming from for very little marginal benefit. I will go ahead with @WSD original idea and that is to allow users to pick cash flow statement group on individual receipts and payments to override default classification. This means when you are drilling-…

[tony]

I cannot reproduce this. Using the Cloud Version payments for fixed assets using the fixed assets module correctly allocates the payment to investing activities.

[Manager_User]

@tony I got the same result.

@gxtsoft What version are you using, (Desktop, Cloud, Server) what device are you using, (Windows, Mac, Linux) what version of that device, and what version of Manager.

All of these questions will help us figure out what and why this is happening to you.
Cause at this point we can’t reproduce your problem.

Are you using the newest version at www.manager.io/download?

If you aren’t then please download and update then see if the problem still exists.

[eko]

@gxtsoft

Previously, the software classified fixed assets as investment activities when using the indirect method to generate the cash flow statement; however, in an update that changed and now it includes them as part of operating activities.

I can not replicate this. Manager records fixed assets as investing activities in both direct and indirect method cashflow statements in Manager v24.8.11.1812 see https://www.manager.io/download, assuming that you enable the fixed assets tab.