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non-current liabilities are valued at their present value and again value changes with time as entity’s cost of capital changes and as we get closer each year to redemption date.
Ok. So you mean if I issue 10% loan notes for 1million this year, next year the value of these notes will not be 1m but will be valued as
Number of notes multiplied by its market value. Right?
In that case how will the changes be reflected in the financial statements?
Also how will the changes in current assets, current liabilities be reflected in the financials?
Q2. Preference shares are treated as a debt right? And the dividend paid is treated as a finance cost .? So while computing tax do we to be subract the dividend also before computing the tax? In that case what is the difference between debt and preference shares?
“Number of notes multiplied by its market value. Right?”
Completely, hopelessly, utterly wrong!
You clearly have no real idea about present value, discounting for the value of money over time and the (almost) total irrelevance of market values for debentures (and even shares)
Did you take F3 or were you ill-advised to claim an exemption?
Watch John Moffat’s F3 lectures … this question of yours shows a lack of appreciation for even the basics of double-entry principles and the concepts of financial statement preparation
Last year I sold goods to you for $4,000 (Dr Receivables $4,000 Cr Revenue $4,000)
During the year you paid me $3,500 (Dr Cash $3,500 Cr Receivables $3,500)
Do you see how the value of Receivables has changed?
So how will that be reflected in the financial statements?
In F7 YOU don’t do anything for the purposes of calculation tax by way of a tax computation
Tax questions at F7 are limited to the inter-action between Deferred Tax and Current Tax
If you want to know about the deductibility of preference dividends for tax purposes, you need to study F6 and pose your questions to Tax Tutor
OK?
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