Arthur Ltd has the following statement of financial position: Assume that Arthur Ltd has an amount owing
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Arthur Ltd has the following statement of financial position:Assume that Arthur Ltd has an amount owing to Blayney Ltd of $300 000 and an amount receivable from
Blayney Ltd of $400 000.
Assuming a right of set-off exists, why would Arthur want to perform a set-off? What would be the impact on the debt-to-assets ratio?
Transcribed Image Text:
Statement of financial position before set-off Loans payable 1 000 000 Loans receivable Shareholders' equity 1 000 000 Non-current assets $2 000 000 1 200 000 800 000 $2 000 000
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