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Dear All, as stated by BPP Book, WorkingCapital is assumed to be recovered in the end of period, however, sometimes in the revision kit there sampleswith no recovery at the period-end. Thus, I wonder, when do we consider WC to be recovered and when it is not? (as sample Revision kit exercise 42,43)
I have answered this several time in different forums.
Only twice in the exam have there been cases where the examiner did not recover the working capital at the end of the project.
For one of the questions, it was because the question specifically told you to ignore the recovery of working capital!
The other one was a year ago. In that question he said that the machine would last four year and would then be replaced. Because it was being replaced he assumed that we would still continue to produce the product, and that therefore working capital would still be needed (and so was not recovered).
However, it was a strange thing to do. The examiner realised this and said that if students had recovered the working capital they would still get full marks (even though the final answer would be a little different).
So in the exam – always recover the working capital unless (obviously) the questions specifically tells you not to.
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Good day. Can you please review question 5 on the September/December 2015 paper as it related to recovery of working capital.
Is it that Working capital should be considered an expense at the start of the period and then recovered at the end of the period
I had included the working capital as an expense at the start of the period but the solution did otherwise and only recover it at the close of the period
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