Forums
Back
Buyback of Shares -DEBT-EQUITY TEST .
Accountancy
i had a doubt relating to buyback , In ICAI module , ILLUSTRATION 3 of Exercise , Current Liabilities is INCLUDED as a part of DEBT in calculation OF DEBT-EQUITY RATIO TEST . Should current liability be included as a part of debt for such calculation ? Same way current maturities of long term borrowings which is a current liability has been taken as debt for calculation debt-equity ratio in illustration 12 by sir .
Answers (3)
Sriram Somayajula Admin
loans are split into current and noncurrent portions - both of them should be considered as debt
if the question states only "other current liabilities" , should that be assumed as a loan and included as debt in the calculation of DEBT-EQUITY RATIO TEST. If so should an assumption be given in the exam in this regard ?
Thread Starter
Hrishi Jainif the question states only "other current liabilities" , should that be assumed as a loan and included as debt in the calculation of DEBT-EQUITY RATIO TEST. If so should an assumption be given in the exam in this regard ?
Question will usually state the current portion of long term debt. Its always preferable to explain your solutions through assumptions made.
Your Reply