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BENTO CO (JUN 15)-Kaplan Exam Kit
5y ago
5y ago#1I don't know what you mean by primary method.
By definition equity is share capital plus reserves.
The share capital after the MBO is 10,000. The retained earnings in the first year are 5,965. Therefore the equity is 15,965.
To arrive at it any other way is time-wasting, and is not possible anyway because you do not know what will happen to the cash balance (which will effectively be the missing figure).
5y ago#2I don't know what you mean by primary method.
By definition equity is share capital plus reserves.
The share capital after the MBO is 10,000. The retained earnings in the first year are 5,965. Therefore the equity is 15,965.
To arrive at it any other way is time-wasting, and is not possible anyway because you do not know what will happen to the cash balance (which will effectively be the missing figure).
5y ago#3Not always, but usually.
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