[Carl]

Sorry mike, just realised that my notes are not the latest version! ?

[Carl]

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?

[Carl]

Yes, that’s a lot better. Should the answer to the next question (Qn 6) also be time apportioned?

Thanks

[Author]

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