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March June 2019, Q2(c)
This is extract answer from ACCA website:
The directors are wishing to recognise this within other comprehensive income rather than profit or loss despite knowing that it is contrary to international accounting standards. This would improve profitability although would not impact upon net assets due to a
corresponding decrease in equity.
Sir, may I know why there would no impact upon net assets and why there is an impact of decreasing in equity?
Thank you in advance.
NA = SC + Reserves
If something goes to one reserve rather than another – NA will not change
If useful please revisit FR notes on ratios / interpretation