PEV Dec 2006 Section 2

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princess
princess Registered Posts: 80 Regular contributor ⭐
Hello
I am really stuck on question 2.2 a. i have managed to prepare a forecast profit and loss(with the help of the answers) but now its asking me to calculate the net assets??
how do i do this??
a very confused PEV re-sitter!

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  • swampy1901
    swampy1901 Registered Posts: 50 Regular contributor ⭐
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    Had to read this one and then think about it for ages. We are told if the company purchases the the machine - the divisions' assets will increase by a million plus the profits for that period. Add these two figures to the net assets from the November figure in the report given on page 6. and that's it!!
    Pity I dont have that long in the exam to think about it though! I'm on my 4th resit!!

    Swampy
  • Terdoo
    Terdoo Registered Posts: 144 Dedicated contributor 🦉
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    Re PEV Dec 06

    This is how i do the working =:
    Gross profit on your forcast profit and loss
    168,000 + Nov net asset 1,204700 = 1372700 (Renting)
  • princess
    princess Registered Posts: 80 Regular contributor ⭐
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    Thank you so much! Could not get my head around it!!!! Did it say to use the Nov figures?
  • swampy1901
    swampy1901 Registered Posts: 50 Regular contributor ⭐
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    No it does'nt! So can only assume this from the answers given and then working it backwards!

    Swampy
  • Rinske
    Rinske Registered Posts: 2,453 Beyond epic contributor 🧙‍♂️
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    It might seem odd, but in the additional data it says:

    "If the company rents the machine, the division’s net assets will only increase by the profit for
    the period."

    Based on that you can conclude that you're supposed to use the November figures, however, it doesn't seem to make sense, since this includes the Creditors, Debtor and stock figures and these normally don't stay the same every month.

    I hope this helps! Although it took me a while to work out as well.
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