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Highmoor’s investment as at 30 september 2003 = $225 million
Note: included in highmoor’s investments is a loan of $50 million made to slowmoor on 1st april 2003. On 28 september 2003, slowmoor paid $9 million to highmoor. This represents $4 million for the year and the balance was a capital repayment. Highmoor has not received nor accounted for the payment, but it had accrued for the loan interest reveivable as part of its accounts receivable figure.
Please explain and how to treat it.
Cancel the anticipated interest in Highmoor’s records (debit investment income and credit the Current account with Slowmoor with the accrued / anticipated loan interest that Highmoor has recorded.
Now, accelerate the 9m into Highmoor’s records (debit cash 9m and credit investment income 4m, credit Current account with Slowmoor 5m)
Now cancel the intra-group current accounts out of Receivables and Payables
If you are preparing the CSoPorL don’t include as investment income the 4m loan interest receivable and don’t include 4m in the finance charges
Is that ok?
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