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While preparing SOFP to find impact of EV clubs sale , why does the model answer not add “Forecast profit after sale of EV clubs of $1,331 m to retained earnings and cash.
This way total of assets and “equity + liability” will be $19,983m instead of $18,652.
Please let me know if this is correct or not.
Thanks in advance!!
The question says that the CEO wants to know the impact the same would have immediately on the SOFP.
The forecast profit next year (which is also required because the CEO also wants to know the impact on the Year 1 forecast EPS), will only go to retained earnings in the SOFP at the end of Year 1 and not immediately.