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Hi John,
Page 309 (BPP FA).
Why are they recording the sale of private yacht as an additional capital under capital account?
shouldn’t we credit the disposal account and debit the cash?
Thank you in advance!!!
I assume you are referring to the BPP Study Text. I do not have the Study Text (it is not really needed if you are watching our free lectures) and only have the Revision Kit.
However if it is a private yacht and therefore owned by the business owner privately and not owned by the company, then it will not have appeared in the books of the company and will not have appeared in the SOFP.
If the owner sells the yacht then the receipts is his money and not the companies money. If he chooses to leave the money in the company then he has effectively paid in more capital to the company.
Yeah, it is from BPP study text.
Thank you for the detailed and quick response!!! You are the best!!!:)
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