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Hello,
I would like to ask you why the gain of $2m under proposal 3 is not taxed in the answer of the kit?
My other question is why don’t we use the same approach of preparing the statements of financial position in question BBS Stores 06/09? There the amounts for cash and retained earnings are adjusted for the impact of borrowings.
Thank you!
1. It is an assumption 🙂
The examiners answer does say “The profit from the sale of the assets for proposal 3, of $2,000,000, is assumed to be after tax. Answers which consider the profit to be before tax, and therefore only take into account $1,600,000 as the net profit, will receive full credit.”
2. I am not sure what you mean. The profits (and therefore the retained earnings) have been adjusted for the impact of the borrowings in Ennea.
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