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SBR BPP Question 49 – Guidance

Forums › ACCA Forums › ACCA SBR Strategic Business Reporting Forums › SBR BPP Question 49 – Guidance

  • This topic has 2 replies, 3 voices, and was last updated 6 months ago by Rubyta.
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  • May 22, 2022 at 8:38 pm #656212
    mkanesimmons
    Participant
    • Topics: 5
    • Replies: 2
    • ☆

    Can anyone help explain the answer to this question?

    Table 1:
    Net profit before tax 38
    Sales 220
    Assets 210
    Equity 100

    Table 1 shows the figures for 2006. The question asks to adjust these figures for a share buy-back (details below). How have they come to the answers given in table 2?
    It also asks for adjustment related to a special purpose entity (increase assets 50 and increase equity 50 – included in the table 2 figures) and to an investment in an associate (decrease in net profit and equity – included in the table 2 figures) but i under stand that adjustment.

    Table 2:
    Net profit before tax 34
    Sales 220
    Assets 290
    Equity 176

    1) Share buy-back
    Guidance Co has bought back 25m shares of $1 for $1.20 per share during the year ended 31 Dec 2006 for cash and cancelled the shares.

    Guidance also raised loan capital for the first time during the year ended 31 Dec 2006 of $20m to help with the buy-back of shares.

    The answer shows an increase in assets of 30 and of equity 30 but i dont understand how they have got to these numbers

    May 28, 2022 at 9:47 am #656714
    heryor1
    Participant
    • Topics: 0
    • Replies: 8
    • ☆

    same question I have, please anyone with a good explanation of the treatment?

    August 8, 2022 at 9:44 am #662656
    Rubyta
    Participant
    • Topics: 0
    • Replies: 8
    • ☆

    Table 1 already included all miscellaneous transactions and Set up SPE entry , now we need to adjust to exclude the entry we have recorded . Last time we record : Debit Equity / Credit asset , so now we have to revert : debit asset/ creidt equity : 30

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