When shares are issued against purchase of machinery, it does not come in statement of sources & application of funds because both accounts which are affected by this transaction (share capital and machinery a/c) are non-current in nature.
But when shares are issued against stock or inventory then we include the amount in sources of funds. Why do we do this? In both cases no sources of funds are generated. Kindly provide clarity.
Also, please look at question 11 in this link: https://books.google.co.in/books?id=-V8mFWoc-IUC&pg=PA59&lpg=PA59&dq=%22the+assets+of+another+company+were+purchased+for+Rs.+60,000+payable+in+fully+paid%22&source=bl&ots=f1bz3dI1sU&sig=5MSUNSshTJs10GHsELQeWubA-b4&hl=en&sa=X&ved=0CCgQ6AEwBGoVChMIhKmghcOjyAIVS4-OCh2D5QZf#v=onepage&q=%22the%20assets%20of%20another%20company%20were%20purchased%20for%20Rs.%2060%2C000%20payable%20in%20fully%20paid%22&f=false
Here the net profit before tax is given as Rs. 65,530. How do we use this figure or arrive at this figure?
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