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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Financial Accounting An Introduction

ISBN: 9780273737650

2nd Edition

Authors: Mr Barry Elliott, Mr Augustine Benedict

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Question Posted: Aug 30, 2023 08:10 AM

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George owns a car acquired for 24,000, using a loan of 6,000 from Finco Ltd. When he

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In both scenarios the sale price of the vehicle is the same agreed at 25...View the full answer

Financial Accounting An Introduction

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