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Dear Tutor
from the publish answer, there is no consideration/calculation for finance costs, neither in stage 1 or 2.
stage 1: $10k * 8% effective rate
stage 2: $346825 * 8%should we not take it into loss allowance? from lecture note, it looks we need to include it in.
Many thanks.
at stage 2, should use $356825 * 8%, only in stage 3, using net value of the investment
I think we over-complicate impairment in teaching notes.
B/f allowance is 10,000
C/f allowance is 356,825Balance to P&L – some is interest and some is not, but the question is asking for a simplified explanation to directors.
If that doesn’t make sense, please come back to me.
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