aqa accounting unit 2 - disposal of assets

Hi can anyone explain to me how you do disposal off asset accounts any help will be really great ,I cant find any notes on it but I have a feeling it will come up tomorrow .

cheers

Reply 1

jakebonnington

Original post by harrygregor

Hi can anyone explain to me how you do disposal off asset accounts any help will be really great ,I cant find any notes on it but I have a feeling it will come up tomorrow .

cheers

so your disposals account will be
dr asset cost (the one you dispose)
cr depreciation (the one you dispose)
cr proceeds from the sale

then your balance cd will be the profit or loss on disposal so
dr profit on disposal
cr loss on disposal

Reply 2

sahand79

WHAT are the debits and credits for a rights and bonus issue?

Reply 3

dogra

Original post by sahand79

WHAT are the debits and credits for a rights and bonus issue?

Rights issue:

Dr Bank
Cr Ordinary shares with face value of issue
cr share premium with extra value -(selling price of share minus face value)

Note in exam they can say right issue sold at a premium of 30p, means extra above the face value e.g. face value = 50p, then rights issue will be for 50p+30p=80p

Reply 4

sahand79

Original post by dogra

Do we need to know the double entry by the way. I have never seen a question which shows you need to know it. Also, I don't get what is meant by a double entry of this stuff. Why do we debit the ordinary shares and why credit the share premium.

Reply 5

dogra

Original post by sahand79

WHAT are the debits and credits for a rights and bonus issue?

Bonus issue- find number of shares then * figure b4 word :FOR, and / by figure after word FOR.
Value of bonus = number of bonus * face value per share, then e.g value = £1million, this will come from other sections of statement of changes in equity, but retained earnings is used last as dividends come from here. e.g. :
Cr Ordinary shares: £1million
dr Share premium £0.4million (e.g.)
dr revaluation reserve- £0.3 million (e.g.)
dr retained earnings - £0.3 million(e.g.)

Reply 6

dogra

Original post by sahand79

double entry not normal, more for statement of changes in equity.

DEAD CLIC:

ORDINARY SHARES GOES UP , HENCE CREDIT as part of capital in CLIC,Share premium goes up, then Credit, as part of capital in CLIC.

Reply 7

DJKL

Original post by dogra

Why do you have a posting to the revaluation reserve re a share issue? Struggling to understand this leg of your journal.

Do they teach AQA to any particular accounting standards, the reason I ask is revalation reserves are currently being merged into retained earnings under FRS102 but not sure if at this level the different reporting regimes are examined?

Reply 8

dogra

Original post by DJKL

Revaluation reserve can come into statement of changes of equity, via increase in NCA, as a result can be used when bonus shares issued

Reply 9

DJKL

Original post by dogra

Revaluation reserve can come into statement of changes of equity, via increase in NCA, as a result can be used when bonus shares issued

Thanks, really interesting, shows how out of date I have become re Companies Acts etc.

It is a strange use of such a reserve, non distributable re distributions yet may be used re share issue. It means a company wishing to both issue bonus shares and pay a dividend could use the RV to issue the shares preserving the retained profits for the distribution.