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ACCA F9 lectures ACCA F9 notes
April 30, 2016 at 6:46 pm
Thank you very much for your clear well explained lectures. I have a little different approach to example 2 and 3 event though I understand your method. Can please tell if it acceptable:
Current Cost Without Discount Interest Paid/Cost
30 Day 20m*20%*15%*(30/365) 49315
60Day 20m*50%*15%*(60/365) 246575
90Day 20m*30%*15%*(90/365) 221918
Total Cost 517808
With Discount Policy Interest Paid/Cost
1% Discount 20m*60%*1% 120000
Remaining 20m*40%*15%*(90/365) 295890
Total Cost 415890
Net Saving from Offering Discount is 517808-415890=$101918
Decision: Offer discount because it cost less.
1 Month 10m*20%*18%*(1/12) 30000
2 Month 10m*30%*18%*(2/12) 90000
3 Month 10m*50%*18%*(3/12) 225000
Total Cost 345000
Factoring Receivable (Cost)
1 Month 10m*100%*18%*(1/12) 150000
Fee 10m*2% 200000
Net Saving From Credit Control (20000)
Total Cost 330000
Net Saving on Factoring 345000-330000=$15000
Decision: Factor Receivable since there is net saving or the cost of not factoring outweighs the cost of factoring
I can see the decision in example 2 is different from the lecture. But Example 3 seems similar. Am I wrong in my thinking and why please?
Your prompt response will be much appreciated. Thank you in advance.
John Moffat says
May 1, 2016 at 8:32 am
Your calculation of the cost with the discount in example 2 is wrong because you have not included the interest cost on the 60% who do take the discount, for the 30 days that they are still taking.
May 2, 2016 at 3:03 pm
Thank you very much for your reply. Please apart from that error (which I now realised with your help) will the format and approach be ok?
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