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Dear Sir
Q(b)
I notice reserves don’t come into the picture. When i calculated the amount i added the assets less redundancy plus there were 10 in reserves
Is it a rule to ignore reserves in the case of an acquisition or disposal?Regards
Richard Scully
Share capital plus reserves is simply the book value of the amount owing to shareholders. Reserves are not an asset or liability.
If the company is closed and all the assets are sold, then the shareholders get whatever is left – nothing to do with what share capital and reserves appear as in the SOFP.don’t the reserves represent saved cash from retained earnings? like a cash pile for instance.
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