George owns a car acquired for 24,000, using a loan of 6,000 from Finco Ltd. When he
Question:
George owns a car acquired for £24,000, using a loan of £6,000 from Finco Ltd. When he advertised the car for sale, John Smith agreed to buy it for £25,000.
Required:
(a) Account for the disposal of the car in George’s books in each of the following scenarios:
Scenario (1): George undertakes to settle the Finco Ltd loan.
Scenario (2): As part of the deal John Smith undertakes to discharge the Finco Ltd loan.
(b) Explain whether the sale price of the vehicle and the purchase consideration are the same amount in both scenarios.
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Related Book For
Financial Accounting An Introduction
ISBN: 9780273737650
2nd Edition
Authors: Mr Barry Elliott, Mr Augustine Benedict
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