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I need assistance in a problem related to amortised cost method:
So, there are two methods I have came across to split current and non current liabilitiesB/f Effective Interest. (Interest Paid). C/f
X. Y. Z. X+Y-Z
Here Y is CL and c/f will be NCLBut sometimes, we also use:
B/f Effective Interest. (Interest Paid). C/f
A B C. D(A+B-C)
X Y Z H(X+Y-Z)Here, H-D is CL and H is NCL
How to precisely know where to use which method please assist very confused
Hi,
Sorry but I can’t follow the layout of your tables. The easiest way to look at it is to take the number immediately to the right of the final payment in the following year, and this is the NCL element.
The difference between this figure and the total liability at the reporting date is the CL element.
I’d try not to take any short-cuts or memorise another alternative method of splitting the liability.
Thanks.
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