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Why is the loan interest in the P&L account 192,000?
How do you arrive at this figure?
Thank you for asking this! it’s made me look again at the question AND the answer and I now have the opportunity to note corrections needed to the answer!
The printed answer should look like this:
$24m @ 8% = $1.92m
$25m @ 6% = $1.5m
Difference $420,000But we’re looking only at a 6 month period
So the difference is 1/2 x $420,000 = $210,000
Finance charge for 6 months $960,000
Loan account on SoFP $24,210,000Is that better?
Yes, that’s a lot better. Should the answer to the next question (Qn 6) also be time apportioned?
Thanks
Is that the question Reading and Orange?
I have a note to myself to change that answer too. My re-calculation puts the nci at $262,667
No. I was referring to Mini exercises 7, Loan interest/preference dividends Qn Question 6
The $40 million loan note was issued at par on 1 October, 2012. No interest will be paid on the loan; however, it will be redeemed on 30 September, 2015 for $53,240,000 which gives an effective finance cost of 10% per annum
What finance charge will appear in the statement of profit or loss for the year ended 31 March, 2013
Should the answer be 40m @ 10%= 4m x 6/12 = 2m?
????????????
According to my version of the answers, on page 239, the printed solution shows $2m
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