Langer Ltd is to restructure its owners' equity by making its issued shares paid up to $0.50.It will do this by transferring half the amount from the asset revaluation reserve and the remainder from retained profits.Langer Ltd currently has 1 000 000 shares on issue paid up to $0.25.The asset revaluation reserve balance is $50 000.What is the minimum amount by which Langer Ltd must revalue upwards its non-current assets so that it can effect this transfer?

Question

Quizplus · Accepted Answer

The minimum amount by which Langer Ltd must revalue upwards its non-current assets so that it can effect this transfer is $75,000. This is because the company needs to transfer $25,000 from the asset revaluation reserve and $50,000 from retained profits. The asset revaluation reserve currently has a balance of $50,000, so the company needs to revalue its non-current assets upwards by at least $25,000 to cover this transfer.

Langer Ltd Is to Restructure Its Owners' Equity by Making