How the disposition of fixed assets increase or decrease the working capital of the firm.?

Answer 1

Dispositioning is a fancy term for buying or selling.

Buying (or contracting for) a fixed assets takes money. You are either spending the cash upfront, or agreeing to some form of payment schedule. So you have an expense associated with that bill. If you are doing a lump sum payment, obviously you need to plan to have a whole lot of cash available. If you are using some form of financing, then you need to plan on this additional expense as part of your monthly cash requirements.

The other thing is that you get to depreciate fixed assets. This hypothetical expense can often be used to understate your taxable earnings. In effect it provides a sort of cash stream while you own and are depreciating the asset the asset. Although when you sell the asset you re-capture the depreciation up to the amount you made on the sale.

Answer 2

If by disposition you mean sale of fixed assets, then it may result in more cash or near cash assets which form part of current assets and hence cause an increase in working capital.

Answer 3

using depreciation impacts the financial statements and in some international places the taxes of agencies and persons. The recording of depreciation will reason an cost to be regarded, thereby decreasing mentioned earnings on the income assertion, at the same time as the internet value of the asset (the component of the historic value of the asset that maintains to be to grant destiny value to the employer) will decline on the stability sheet. Depreciation mentioned for accounting and tax applications might fluctuate extensively. Depreciation and its suitable theory, amortization (in many circumstances, the depreciation of intangible sources), are non-funds expenditures. Neither depreciation nor amortization will straight away impression the money circulate of a employer, as the two are accounting representations of expenditures subsequently of a given era. In accounting statements, depreciation might neither parent interior the money circulate assertion, nor be "further lower back" to internet income (alongside with different products) to derive the working funds circulate.[2] Depreciation regarded for tax applications will, besides the undeniable fact that, impression the money circulate of the employer, as tax depreciation will cut back taxable earnings; there is often no requirement that scientific care of depreciation for tax and accounting applications be same. the place depreciation is shown on accounting statements, the parent oftentimes does no longer relate to depreciation for tax applications. In economics, depreciation is the shrink interior the financial value of the capital inventory of a company, u . s . a . or different entity, the two by way of actual depreciation, obsolescence or modifications interior the call for for the centers of the capital in question.