December 2017 (Eview cinema)

This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.

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November 20, 2018 at 1:36 am #485282
Ng
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Hi John,
Regarding Question 2 (a), why is the profit on sale of the Ev club the (premium+value using FCF) – net book value of non-current asset?
Why Do we use the net book value of NCA? I don’t understand why they use this figure.
Also, isn’t the value of the firm 6135?
If so, why are we not just taking the premium as the profit?
I appreciate your time.
November 20, 2018 at 7:32 am #485297
John Moffat
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The question is asking for the SOFP, and so this is prepared using financial accounting ‘rules’ – the NCA’s are always shown at net book value in SOFP’s.
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