Movearound Pty Ltd had losses in Year 1. It, therefore, changed its business in Year 2 from being a removalist to building renovations. Shares were issued to new shareholders in Years 2 and 3 to fund the new business as follows: Shares Shares Shares Shareholder Year 1 Year 2 Year 3 Pushin Shove Groan Mozzy 2 2 4 4 7 8642 State which of the following statement is correct? Losses from Year 1 can be offset against profits in Years 2 and 3 Losses from Year 1 cannot be offset against profits in Years 2 or 3 Losses from Year 1 can be offset against profits in 3 only Losses from Year 1 can be offset against profits in any years going forward as the company satisfies the similar business test. If there were losses in Year 2, it could be offset against Year 3 profits. If there were losses in Year 2, it could not be offset against Year 3 profits.
Movearound Pty Ltd had losses in Year 1. It, therefore, changed its business in Year 2 from being a removalist to building renovations. Shares were issued to new shareholders in Years 2 and 3 to fund the new business as follows: Shares Shares Shares Shareholder Year 1 Year 2 Year 3 Pushin Shove Groan Mozzy 2 2 4 4 7 8642 State which of the following statement is correct? Losses from Year 1 can be offset against profits in Years 2 and 3 Losses from Year 1 cannot be offset against profits in Years 2 or 3 Losses from Year 1 can be offset against profits in 3 only Losses from Year 1 can be offset against profits in any years going forward as the company satisfies the similar business test. If there were losses in Year 2, it could be offset against Year 3 profits. If there were losses in Year 2, it could not be offset against Year 3 profits.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Movearound Pty Ltd had losses in Year 1. It, therefore, changed its business in Year 2 from being a
removalist to building renovations. Shares were issued to new shareholders in Years 2 and 3 to fund the new
business as follows:
Shares Shares Shares
Shareholder
Year 1 Year 2
Year 3
Pushin
Shove
Groan
Mozzy
2
2
4
4
7
8642
State which of the following statement is correct?
Losses from Year 1 can be offset against profits in Years 2 and 3
Losses from Year 1 cannot be offset against profits in Years 2 or 3
Losses from Year 1 can be offset against profits in 3 only
Losses from Year 1 can be offset against profits in any years going forward as the company satisfies the similar
business test.
If there were losses in Year 2, it could be offset against Year 3 profits.
If there were losses in Year 2, it could not be offset against Year 3 profits.
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