Q. Whether on account of term loan instalments repayment, capital employed will come down ?
ASSUMPTIONS:
Instalments are paid out of earnings/retained earnings.
There is no depreciation applicable to the asset (just believe it)
The firm is running profitably.
Accounting standards do not apply. (for simplicity)
Assets created are used for Job-work. (for simplicity)
No Current liabilities & current assets except bank a/c (for simplicity)
Yes Capital employed will decrease.
Capital employed= Share Capital+Reserve & Surplus+Non current liability
Hence Loan repayment are also the part of Capital Employed
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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