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capitalisation of intercompany borriwings

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › capitalisation of intercompany borriwings

  • This topic has 3 replies, 2 voices, and was last updated 9 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 14, 2015 at 11:10 pm #267231
    Victoria
    Participant
    • Topics: 28
    • Replies: 70
    • ☆☆

    Mike, could you, please, advise me on how we should treat intercompany borrowings when they are directly incurred on a ‘qualifying asset’? is there any PUP or something we exclude somewhere in FS in this case?

    August 15, 2015 at 7:08 am #267244
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    Assuming that both separate companies have correctly accounted for the loan interest receivable and finance charges (loan interest payable), the issue comes down to what happens on consolidation

    I’ve never come across this before but my intuition takes me along the lines of:

    Dr Loan interest received / receivable
    Cr TNCA (in so far as the borrowing costs have been capitalised)
    Cr Finance charges (in so far as some borrowing costs may not have been capitalised)

    I think that would do it!

    August 15, 2015 at 7:25 am #267247
    Victoria
    Participant
    • Topics: 28
    • Replies: 70
    • ☆☆

    makes sense to me. thanks a lot!

    August 15, 2015 at 7:27 am #267248
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    You’re welcome

  • Author
    Posts
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