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Hi,
I recently sat the online mock for manual level 3. One of the questions required working out total assets - current liabilities.
So I take the balance given (850,000) then work out the latest figure, taking into account what happened during the year - retained profit 145,000, land revalued (increase 40,000), 26,000 ordinary shares issued and 50% debentures were redeemed at par (previous amount - 100,000). I come to 1,061,000 (850,000 + 145,000 + 40,000 + 26,000)... The correct answer is 1,011,000.
I'm assuming you get to this by subtracting the 50,000 debentures redeemed. But what I would like to know is why this is... The question is total assets - current liabilties, but debentures are long term liabilities..?
Thanks,
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