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Bento co (JUN 15)
– In (a) where did the answer sheet get 15,965 in the estimate of gearing, book value of equity ???
– Is there more questions like this type ? because I could n’t see this kind of question in the notes in the past year paper… or is it just a common knowledge question ??
– In part (b), where can I get 1200,000 ??? it seems that year 1 finance cost was obtained by 2400,000 and 1200,000 but I’m not sure how they get 1200,000But the answer explains this:
“*The book value of equity consists of the sum of the 5,000,000 equity shares which Dofu Co and Okazu Co’s senior management will each invest in the new company (total 10,000,000), issued at their nominal value of $1 each, and the retained earnings from year 1. In subsequent years the book value of equity is increased by the retained earnings from that year.”
This is financial accounts knowledge.
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