A co acquired a 60% holding in B limited on 1 July 20x6. At this date, A gave B a $500,000 8% loan. The interest on the loan has been accounted for correctly in the individual financial statements. The following totals for finance costs for the year to 31 december 20x6 in the individual financial statements are shown below.
A co $200,000
B CO $70,000
WHAT are consolidated finance costs for the year to 31st december 20x6?
A)$ 215000
B)$ 225000
C) $230000
D) $250000
$500000*8%*6/12 = $20000
at the back of the kit the answer is B) $225000
Can you tell how they got that answer as I am not getting it
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Consolidated finance costs
9y ago#1Nor, nor am I!
I think that the interest on the loan for 6 months at 8% is:
$500,000 x 8% x 6/12 = $20,000
That $20,000 is an intra-group transaction and mirrored by A Limited as loan interest received
The received amount of $20,000 is cancelled against the $20,000 included within B Ltd's finance costs leaving B Ltd finance costs at $50,000 (70 - 20) and an aggregate consolidated finance cost of $200,000 + $50,000 = $250,000 = option D
Ohhhk
Thanks
9y ago#3You're welcome
Hi mike,
Pass paper March/June 2016 Q1 can you work the retained earnings calculation for me please.
I try by subtracting the preq 8600 from negative 3000 getting 5600 to start out
medda 5600
loss (200)
dep 500
appp losses (1500)
plant (2500)
tax asset ( 1200)
can you help me please
9y ago#5What's the matter with working (ii) from the suggested solution on page 11 of the answer sheet?
Here's a link:
'https://www.accaglobal.com/content/dam/ACCA_Global/Students/fun/f7/j16_hybrid_F7_q.pdf.pdf'
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