• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>

Question Sep/Dec 2015 Flufftort Recorganisations part (a)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Question Sep/Dec 2015 Flufftort Recorganisations part (a)

  • This topic has 3 replies, 2 voices, and was last updated 2 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 11, 2022 at 9:37 am #668289
    rasoulsami
    Participant
    • Topics: 3
    • Replies: 1
    • ☆

    Hello Sir
    I can not figure it out in part a) of answer how company could buyback shre ofGupte with below accounting records

    Share buyback ( euity)Debit of 10
    Cash Credit 7.6
    Retained earnig Credit 2.4

    I meant how Retained earning could increase for profit of the year? could you please explain this?

    Thank you
    Regards

    October 11, 2022 at 5:07 pm #668321
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54655
    • ☆☆☆☆☆

    This is actually financial accounts rather than financial management 🙂

    The profit for the year does not increase. The ‘profit’ on the buyback of the shares goes straight to retained earnings.

    October 12, 2022 at 7:10 am #668361
    rasoulsami
    Participant
    • Topics: 3
    • Replies: 1
    • ☆

    Hello Sir;
    Sorry posting twice was a connection mistake ?
    Thank you for your quick reply . However based on the question there is no profit on the buyback of share .
    Gupte co had 20% of share (10 M @1$ par value ) . My understanding is it has been bought back at the same par value without profit . It is not clear from the question if there were a profit on the transaction. Am I wrong?

    Regards

    October 12, 2022 at 8:19 am #668369
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54655
    • ☆☆☆☆☆

    Sorry – ignore my previous reply!!

    The double entry for buying back the sales at par is Cr Cash 10M and Dr Share Capital 10M.

    The cash at 2015 was 7.6M. The question says to assume that the retained earnings at 2016 (which are 2.4M) are the net increase in cash for 2016. So the cash prior to buying back the shares was 10M. They pay our 10M which leaves the cash balance at zero.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • singhjyoti on Conceptual Framework – ACCA SBR lecture
  • John Moffat on Time Series Analysis – ACCA Management Accounting (MA)
  • azubair on Time Series Analysis – ACCA Management Accounting (MA)
  • Gowri7 on Relevant cash flows for DCF Working capital (examples 2 and 3) – ACCA Financial Management (FM)
  • Govere on The use of ratios and comparisons in auditing

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in