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Suggest reasons why there would be an unexpected purchase of a non-current asset and state the flow on effect.

User Nels
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Final answer:

An unexpected purchase of a non-current asset can occur due to new growth opportunities or expansion projects. This would result in an increase in assets on the balance sheet and a corresponding decrease in cash or increase in liabilities.

Step-by-step explanation:

An unexpected purchase of a non-current asset can occur for several reasons. One possibility is that the business may have identified a new growth opportunity or expansion project that requires the acquisition of additional assets. For example, a manufacturing company may decide to purchase new machinery to increase production capacity.

The flow-on effect of this unexpected purchase would be reflected in the company's financial statements. The non-current asset would be recorded on the balance sheet as an increase in assets. Additionally, the purchase would likely result in a corresponding decrease in cash or an increase in liabilities if the company financed the purchase through debt.

User JMira
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