Example 3 Ch 8 pp 52

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December 8, 2012 at 10:33 pm #56288
wgk
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Sell the asset for 100,000:
Then Assets reduce by 80,000
And Receivables/Cash up by 100,000
Therefore, retained profits up by 20,000
And SoFP balances!!

So from a from a consolidation perspective:
Retained earnings down by 20,000, and
Cash/Receivables down by 20,000!!!
December 9, 2012 at 9:54 am #110982
MikeLittle
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No, Retained earnings down by 20,000, TNCA down by 20,000 ( this is the example on selling assets within the group isn’t it? )
December 9, 2012 at 2:21 pm #110983
wgk
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yes, this is the example on selling assets. i just don’t understand why TNCA down by 20,000. the 100,000 would become a receivable when asset sold, so therefore the 20,000 reduction should be in receivables (and retained earnings)?!?!
December 9, 2012 at 6:14 pm #110984
MikeLittle
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But the receivable in one set of records is also a payable in the other set. And therefore, they cancel.

However, so far as the group is concerned, the TNCA is overvalued by 20,000
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