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Coatmin: Financial Guarantee

This topic has 4 replies, 2 voices, and was last updated 5 years ago by boma77.

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January 31, 2017 at 8:17 pm #370431
boma77
- Topics: 70
- Replies: 97
Dear Tutor,

I have a question regarding the accounting entries for the calling of the guarantee:

DEBIT Financial liabilities $39.6m
CREDIT Profit or loss $39.6m

Why the entry is not for the amount $39.2, which would leave the amortisation of 0.4 also for the second year in the P/L?

Thank you.
February 1, 2017 at 9:47 pm #370677
P2-D2
Keymaster
- Topics: 4
- Replies: 6244
Hi,

Where is the question?

Thanks
February 2, 2017 at 5:58 am #370702
boma77
- Topics: 70
- Replies: 97
Dear Tutor,

the question is from the BPP revision kit: Question No. 18 Coatmin.

Thank you.
February 5, 2017 at 8:00 pm #371233
P2-D2
Keymaster
- Topics: 4
- Replies: 6244
Hi,

The journal is removing the $39.2 million that was recorded at the reporting date and also the amortisation of the fair value of the guarantee at $0.4 million.

I wouldn’t worry too much about this one though as it is a ridiculously hard question.

Thanks
February 6, 2017 at 5:13 am #371262
boma77
- Topics: 70
- Replies: 97
Thank you.
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