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a lot of doubt !!
1))why the Revised/forecast retained earnings figures(11801) afrer selling off the EV club does not account for the revised forecast profit? And only take into account of profit on sale of EV clubs as the adjusted profit have increase from 1135 to 1331?
2)other info adj 3 they have given us the market value of equity and also told us that there is a slight increase due to the sale so shouldn’t we adjust the statement of financial position for the same?
3)same goes for debt they have given us the market value of debt in other info adj 4 so shouldn’t we adjust the statement of financial positions?
4) answer does not account of the lower interest cost as the pre-tax
cost of debt currently 9% and assumed to fall to 8% when 10% loan notes are redeemed it only account for the decreased interest rate in WACC calculations but it does not account for it in the statement of profit and loss why is that so?1. The question says that the CEO wants to know the impact on the SOFP immediately after the sale, not the impact in 1 years time.
2. The SOFP never shows the MV of equity or of debt. This is financial accounting 🙂
3. Again, this is financial accounting, in the financial accounts we always show the actual interest being paid.
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