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Good sold for shares

Atharv Sankliya (1306 Points)

02 March 2023

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

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18 Replies

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 03 March 2023

Investment in shares a/c Dr

To Sales

It's an asset under investments

3 Like

Atharv Sankliya (1306 Points)
Replied 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) (58213 Points)
Replied 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

3 Like

Atharv Sankliya (1306 Points)
Replied 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??

1 Like

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 03 March 2023

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

1 Like

Atharv Sankliya (1306 Points)
Replied 03 March 2023

Ok sir

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 03 March 2023

👍🏻👍🏻👍🏻

1 Like

Atharv Sankliya (1306 Points)
Replied 03 March 2023

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

1 Like

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 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

1 Like

Yasaswi Gomes new (Finance ) (4469 Points)
Replied 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

1 Like

Yasaswi Gomes new (Finance ) (4469 Points)
Replied 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

1 Like

Atharv Sankliya (1306 Points)
Replied 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?