acct1511 2010s2w06 HomeQ

acct1511 2010s2w06 HomeQ - 19 600 Weldon Ltd...

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Suggested solutions to homework questions – Week 5 Problem 11.12 Capital – Results from capital profits (e.g. sale of investments). General – Created by the transfer of profits from retained profits. Asset revaluation – Results from the upward revaluation of assets. Foreign currency translation – Results from unrealised foreign currency gains. Problem 11.15 Weldon Ltd Income Statement for year ended 30 June 2009 $ Operating profit before tax 22 000 Less: Income tax expense 9 000 Profit after tax 13 000 Note of retained profits year ended 30 June 2009 $ $ Balance 1 July 2008 25 000 Profit after tax 13 000 38 000 Less: Interim dividend paid 5 600 Proposed final dividend 2 800 Transfer to general reserve 10 000 18 400 Balance 30 June 2009
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Unformatted text preview: 19 600 Weldon Ltd Shareholders’ equity section of balance sheet as at 30 June 2009 $ Share capital 125 000 General reserve 28 000 Asset revaluation reserve 20 000 Retained profits 19 600 Case 11D 1. Some possible reasons: - if the share price is low it is one way of increasing demand - increases EPS as number of shares decreases (assuming profit does not drop proportionally). - Move considered important part of capital management. 2. More likely if share price is depressed. 3 Cash decreases; a shareholder equity account decreases e.g. retained profits. Profit is not affected but EPS will increase as the denominator falls, i.e. the number of shares....
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This note was uploaded on 09/08/2011 for the course ECON 908 taught by Professor Bullshit during the Spring '11 term at United Theological Seminary.

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acct1511 2010s2w06 HomeQ - 19 600 Weldon Ltd...

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