14 February 2011
1. what is the meaning of trade investment ande non trade investment. In calculation of net assets and FMP for valuation of shares why non trade invesment and income from non trade investments are deducted.
2. if in the blance sheet on investmetn is given Rs.100000/- then what should we assume whether Trade or Non Trade investment for calculation of Goodwill/shares ?
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15 February 2011
Trade investment is the investment made for running business i.e only for the purpose of business, not required if particular business does'nt exists. For example investment in security deposit paid for taking dealership, Purchasing NSC for opening business etc.
On the other hand investment made for earning income otherwise are non trade investment i.e shares, debentures etc. Non trade investments are not compulsary required for business i.e no relation with business.
Unless otherwise specifically given (provided)all the investments in balance sheet are to be considered as non trade investments.