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Accounting for Intangible Assets

08 Mar 2012 / 0 Comments

Steve Collings looks at the fundamental principles in accounting for goodwill and intangible assets and also looks at some fundamental differences between current UK GAAP, IFRS and the proposed IFRS for SMEs.As accountants we are all aware that an intangible asset does not have any physical form

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Published On:Monday, 28 November 2011
Posted by Muhammad Atif Saeed

Ratio Question Asked by Student

           Given DATA
 working capital                                  Rs. 120,000
reserves and surplus                                  80,000
bank overdraft                                          20,000
Fixed assets / Proprietory fund                 0.75 : 1
current ratio                                              2.5 : 1
liquid ratio                                                1.5 : 1
Required : prepare summarized balance sheet
i calculated following:
Curret assests Rs. 200,000
current liabilities     80,000
in answer balance sheet total is Rs. 560,000
I need to find fixed assets or capital of the above data,

Suggested Solution
CA-CL     120,000
CL             80,000                        200,000
Liquid Assets     120,000
Inventory       80,000
Equity+ Liability                                                          Rs.   Assets   Rs
SC                             400,000                                        FA                            360,000
Resrves + Surplus       80,000                                          Invent                         80,000
 Propriety Fund total     480,000                                     CA (ex. Inventory)      120,000
CL                               60,000
Total                           560,000                                                                          560,000

Check
Working Capital                               120,000
 Resrves + Surplus                             80,000
 Bank OD                                          20,000
Fixed assets / Proprietory fund             0.75
Current Ratio                                      2.50
 Liquid Ratio                                       1.50

 Working
CA-CL                       120,000              (1)
CA/CL                      2.5                       (2)
CA                            2.5C                    (3)
Put Value of (3) in (1)
2.5CL-CL                     120,000
1.5 CL                           120,000
CL                                80,000
Again
CA - CL                       120,000
CA - 80,000                       120,000
CA                       200,000
Propr Fund =   Y
Y =   Asset - CL
Or Y =   CA + 0.75 Y - CL
Or Y - 0.75 Y=   CA + 0.75 Y - 0.75 Y- CL
by subtracting 0.75 Y on both Sides
Or 0.25 Y =   CA - CL
Or Y =   CA - CL / 0.25
While CA - CL =                       120,000
Hence Y=                                 480,000

About the Author

Posted by Muhammad Atif Saeed on 23:25. Filed under . You can follow any responses to this entry through the RSS 2.0. Feel free to leave a response

By Muhammad Atif Saeed on 23:25. Filed under . Follow any responses to the RSS 2.0. Leave a response

1 comments for "Ratio Question Asked by Student"

  1. sir how you find the prop fund which formula you use there?

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I am doing ACMA from Institute of Cost and Management Accountants Pakistan (Islamabad). Computer and Accounting are my favorite subjects contact Information: +923347787272 atifsaeedicmap@gmail.com atifsaeed_icmap@hotmail.com
  1. Accounting for Intangible Assets
  2. Fair Value Measurement of Financial Liabilities
  3. The Concept of Going Concern
  4. The Capital Asset Pricing Model
  5. Bond Valuation
  6. Asset Management Market Efficiency Asset Management Market Efficiency
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