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m/j 06 Q4 how does the profit decrease??
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Economics, Accounting & Business: Post your doubts here!
- Thread starter XPFMember
- Start date
may /june 2005 no. 21 and 24. http://www.xtremepapers.com/papers/... AS Level/Accounting (9706)/9706_s05_qp_3.pdf
Profit decrease as part of it got transferred to the redemption account.
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hahaha...will give the link next tym.why do you never give link to the paper?
Because after the debentures are redeemed, we wont have to deduct the interest from profit
anyways thanx...i forgot abt the intrest...and was thinking how debenture effects profit.
why do you never give link to the paper?
Because after the debentures are redeemed, we wont have to deduct the interest from profit
The profit increases and not decreases!! net current assets decrease!
net bank borrowing are (150+35-15)=170 and ordinary shareholders fund are (120+100+160)=380
so gearing= (170/380) * 100 = 44.7 (rounded figure)
OMG! You are right as per marks scheme but can you explain it.
Well because when you redeem debentures you don't have to pay interest...hence profit will increase as expenses will decrease...and net current assets will decrease because you paid of redeeming the debentures (cash outflow) =)
fixed cost covered by us = 4200 (600 * 7) so the remaining fixed cost to be covered is 800 (5000-4200) and we need 200 more units to break even, so the contribution required will be (800/200) = 4 and hence add the variable cost in contribution to find the selling price , so selling price will be (4+19)=23
still don't get it
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Aree you're a fkng terrorist man. y do u care bout studying. if u fail just send a bomb to cie na chutye
why do you even care about the redemption reserve....?? they asked for effect on profits and net current assets.... =) plus the transfer is done from the retained profits...not the current year's profit i guess!! =)
like in ordinary shares we divide share capital by its price to get the number of shares. Same is case here we divide $10000 by 10 to get the number of debenture notes issued.still don't get it
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Nope. The Debenture Redemption Reserve are not created unless stated by the Directors to do so. They are not compulsory as the creation of Capital Redemption Reserve.
So unless the question mentions the creation of DRR, dont make it!
This question can create a lot of debate as students may also take into account the redemption reserve.
But it doesn't say $10000 its 10000 $10 debentures, so doesn't that mean there are 10000 debenture certificates each worth $10?
Okay people I think this is enough! We all require a good night sleep. Tomorrow's exam can be tricky. I recommend you all to look at the relevant IAS and theories related, not need to look at outdated question papers, 2009-11 will be enough . Best of luck to Everyone!
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soorry bt the MS says profit inc. n net assets dec. how ??