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Good sold for shares

Others 480 views 18 replies

Atharv Sankliya

1359 Points Posted on 02 March 2023

if a company sold goods in exchange of shares under which head of balance sheet it is to be disclosed?

Replies (18)

Eswar Reddy S

CFO- at NHTF

58280 Points Posted on 03 March 2023

Investment in shares a/c Dr

To Sales

It's an asset under investments

Atharv Sankliya

1359 Points Posted on 03 March 2023

What if same is sold in exchange of machinery/plant does it is recorded under PPE ??

Eswar Reddy S

CFO- at NHTF

58280 Points Posted on 03 March 2023

Yes. PPE.

Entries can be based on the general accounting.

Debtors A/c Dr
To Sales

PPE A/c Dr
To Debtors

or PPE a/c Dr
To Sales

Atharv Sankliya

1359 Points Posted on 03 March 2023

But if the machinery is not used in the operation of business then does it is recorded in other non current assets??

Eswar Reddy S

CFO- at NHTF

58280 Points Posted on 03 March 2023

If not used then depreciation can't be claimed but still you have to classify under ppe

Atharv Sankliya

1359 Points Posted on 03 March 2023

Ok sir

Eswar Reddy S

CFO- at NHTF

58280 Points Posted on 03 March 2023

👍🏻👍🏻👍🏻

Atharv Sankliya

1359 Points Posted on 03 March 2023

But sir why it is not recorded as non current assets held for sale ?

Eswar Reddy S

CFO- at NHTF

58280 Points Posted on 03 March 2023

Shares can be sold at any time . So these are easily converted into cash. Hence investments in shares can be considered as a current assets

Yasaswi Gomes new

Finance

4584 Points Posted on 03 March 2023

Non current assets only fall under held for sale. If you have exchanged shares for PPE or Inventory

Dr. PPE

Cr investments

And

Dr. Investment

Cr. Sales

But what if you really got equity shares in exchange and only fvptl investments are classified as assets? Ill come back soon

And

Yasaswi Gomes new

Finance

4584 Points Posted on 03 March 2023

I'm trying to be accentric here and what if the company gave you a minor stake in exchange for inventory? That falls under consolidation !! In your books, everything is a credit like capital and and inventory. What if that really happens? Since your sale doesn't have significant influence, it's treated as financial instrument.what kind of an instrument is it? Nobody knows! I'm not satisfied as the answers here are vague and just because people don't have a double entry, they used their brains to create new transactions. P

Atharv Sankliya

1359 Points Posted on 03 March 2023

Sir I am asking why the machinery the company received from its debtor ( who is unable to pay cash) and which is not used in business operations is recorded as non current assets held for sale?