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I have some doubt with regard to finance cost in SPL and SFP. Following is extrat from test question:
Trial balance:
Loan interest paid 400(DR)
10%loan notes 8000 (CR)SPL:
Finance expense (800)SFP:
Finance expense (400)Sorry for such a question, but it seems to me it’s more logical to make it 400 for SPL and 800 in SFP, because in SPL we show actual payments, whereas in SFP we show accruals.Hope it makes sense.
Hi,
Its difficult to follow without any dates in the question but I’ll assume that the loan notes were issued at the start of the year and so we’ve recorded the full 12 months in the SPL. As only 400 of this appears to be paid then we need to accrue for the amounts not paid, being the difference between the total expense for the year of 800 and the amount paid of 400, thus giving the 400 accrual in the sFP.
Thanks
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