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  1. Point in time
    2006-08-06

SIFA App 2.1 Appendix B: Own funds - worked examples

SIFA App 2.1.1
SIFA_App_B_0003
SIFA App 2.1.2
SIFA_App_B_0004
SIFA App 2.1.3
SIFA_App_B_0005

The firm applied for and was granted a PASS loan facility of £55,000 in January 2000 at that time the firm made a provision for pension review redress of £60,000. The firm has drawn down £6,000 of the facility and subsequently repaid £1000.

The Pass loan adjustment = lower of the agreed loan facility less repayments £54,000 (£55,000 -£1000) & provision at the time of applying for the Pass loan facility £60,000.

Own funds = share capital + audited profit & loss account reserve + Pass loan adjustment

1,000+5,000+54,000 = £60,000

SIFA App 2.1.4
SIFA_App_B_0006

In addition the Partners have combined personal assets of £100,000 and personal liabilities of £20,000.

Own funds = Partners capital accounts + to the extent necessary to make up any shortfall in the required resources Personal assets - Personal liabilities

8,000+2,000 = £10,000

£2,000 is the amount of personal assets required to make up the shortfall in the required resources. The firm's partners have £80,000 in net personal assets but are only required to contribute £2,000 for the calculation.

The calculation for sole traders is exactly the same as the one above. In addition if the firm had:

  • Intangible assets these would need to be deducted in the same way as in example 1.
  • Subordinated loans these can be added as in example 2.
  • Pass loans then these can be adjusted as in example 3.