Good sold for shares
Atharv Sankliya (1356 Points)
02 March 2023
if a company sold goods in exchange of shares under which head of balance sheet it is to be disclosed?
18 Replies
Eswar Reddy S
(CFO- at NHTF)
(58275 Points)
Replied 03 March 2023
Investment in shares a/c Dr
To Sales
It's an asset under investments
To Sales
It's an asset under investments
Atharv Sankliya
(1356 Points)
Replied 03 March 2023
What if same is sold in exchange of machinery/plant does it is recorded under PPE ??
Eswar Reddy S
(CFO- at NHTF)
(58275 Points)
Replied 03 March 2023
Yes. PPE.
Entries can be based on the general accounting.
Debtors A/c Dr
To Sales
PPE A/c Dr
To Debtors
or PPE a/c Dr
To Sales
Entries can be based on the general accounting.
Debtors A/c Dr
To Sales
PPE A/c Dr
To Debtors
or PPE a/c Dr
To Sales
Atharv Sankliya
(1356 Points)
Replied 03 March 2023
But if the machinery is not used in the operation of business then does it is recorded in other non current assets??
Eswar Reddy S
(CFO- at NHTF)
(58275 Points)
Replied 03 March 2023
If not used then depreciation can't be claimed but still you have to classify under ppe
Atharv Sankliya
(1356 Points)
Replied 03 March 2023
But sir why it is not recorded as non current assets held for sale ?
Eswar Reddy S
(CFO- at NHTF)
(58275 Points)
Replied 03 March 2023
Shares can be sold at any time . So these are easily converted into cash. Hence investments in shares can be considered as a current assets
Yasaswi Gomes new
(Finance )
(4545 Points)
Replied 03 March 2023
Non current assets only fall under held for sale. If you have exchanged shares for PPE or Inventory
Dr. PPE
Cr investments
And
Dr. Investment
Cr. Sales
But what if you really got equity shares in exchange and only fvptl investments are classified as assets? Ill come back soon
And
Yasaswi Gomes new
(Finance )
(4545 Points)
Replied 03 March 2023
I'm trying to be accentric here and what if the company gave you a minor stake in exchange for inventory? That falls under consolidation !! In your books, everything is a credit like capital and and inventory. What if that really happens? Since your sale doesn't have significant influence, it's treated as financial instrument.what kind of an instrument is it? Nobody knows! I'm not satisfied as the answers here are vague and just because people don't have a double entry, they used their brains to create new transactions. P
Atharv Sankliya
(1356 Points)
Replied 03 March 2023
Sir I am asking why the machinery the company received from its debtor ( who is unable to pay cash) and which is not used in business operations is recorded as non current assets held for sale?
Yasaswi Gomes new
(Finance )
(4545 Points)
Replied 04 March 2023
Sorry, I've had fever yesterday and doctor gave me meds.
Dr. Machinery/shares
Cr. Inventory
Not all idle assets can be held for sale. Some assets are used for capital appreciation
Atharv Sankliya
(1356 Points)
Replied 04 March 2023
So sir In which head of balance sheet the assets that are not used in operational activities nor it is for capital appreciation are disclosed
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