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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › BPP 38 louieed
Dear Sir
When the question shows an acquisition and existing finance cost, do we saaume that existing debt will remain? Obviously there is an amount of debt already for there to be a finance charge. I am just confused, do we take existing debt and add it to new debt incurred in the sale and then use cash reserves to reduce debt level and then charge interest or do we just take the new debt and ignore existing 74 finance charge?
Unless a question says that the existing debt is repaid, then you assume it remains and then interest will be on all the debt.