Example 3 Ch 8 pp 52

Home Forums Ask ACCA Tutor Forums Ask the Tutor ACCA F7 Exams Example 3 Ch 8 pp 52

This topic contains 3 replies, has 2 voices, and was last updated by Avatar of MikeLittle MikeLittle 1 year, 4 months ago. This post has been viewed 32 times

Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts

  • avatar
    wgk
    Participant
    • Topics: 16
    • Replies: 45

    Sell the asset for 100,000:
    Then Assets reduce by 80,000
    And Receivables/Cash up by 100,000
    Therefore, retained profits up by 20,000
    And SoFP balances!!

    So from a from a consolidation perspective:
    Retained earnings down by 20,000, and
    Cash/Receivables down by 20,000!!!


    Avatar of MikeLittle
    MikeLittle
    Participant
    • Topics: 0
    • Replies: 5499

    No, Retained earnings down by 20,000, TNCA down by 20,000 ( this is the example on selling assets within the group isn’t it? )


    avatar
    wgk
    Participant
    • Topics: 16
    • Replies: 45

    yes, this is the example on selling assets. i just don’t understand why TNCA down by 20,000. the 100,000 would become a receivable when asset sold, so therefore the 20,000 reduction should be in receivables (and retained earnings)?!?!


    Avatar of MikeLittle
    MikeLittle
    Participant
    • Topics: 0
    • Replies: 5499

    But the receivable in one set of records is also a payable in the other set. And therefore, they cancel.

    However, so far as the group is concerned, the TNCA is overvalued by 20,000

Viewing 4 posts - 1 through 4 (of 4 total)

You must be logged in to reply to this topic.