A company had net assets as at 1 January 2016 of 123m The ne

A company had net assets as at 1 January 2016 of £123m. The net profit for the year ended
31 December 2016 was £25m. The Company had paid an equity dividend of £5m during
2016. During 2016 the Company had issued 20 million £1 equity shares at a premium of 50p
each and had borrowed £18m from its bank. The amount to be shown as Equity in the
Statement of Financial Position as at 31 December 2016 is?

Solution

The amount to be shown as Equity in the Statement of Financial Position as at 31 December 2016 is =

Company\'s Equity as at December 31 2016:

Equity shares : 20 m shares at £1 par value = £20m

Add: Paid in capital in excess of par (£20m/2) = £10m

Total Company\'s Equity = £30m