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Consolidated SOPL

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Consolidated SOPL

  • This topic has 1 reply, 2 voices, and was last updated 11 months ago by P2-D2.
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    Posts
  • February 14, 2022 at 5:16 pm #648628
    aliahzaimi
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    On 1 October 20X1 Gold Co issued 100,000 $100 6% convertible loan notes at par value, with interest payable annually in arrears over a five-year term. The equivalent rate for non-convertible loan notes was 8%. Gold Co has recorded the loan notes as a liability at par value and charged the annual 6% interest to finance costs.

    Discount factors in year 5 : Annuity factors for 5 years :
    6% 0.747 6% 4.212
    8% 0.681 8% 3.993

    What is the double entry and the adjustment that i should do for consolidated statement of profit or loss? Thank you

    February 20, 2022 at 9:02 am #648945
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6460
    • ☆☆☆☆☆

    Hi,

    The entry in the group accounts would be the same as in the consolidated accounts. So, initially you need to recognise the convertible using split accounting with an equity element and a liability element.

    The liability is then treated under amortised cost and the equity element is unchanged.

    Have an attempt at doing the accounting and let me know how you get on. I can then let you know if you are correct or not and if not then I can point you in the right direction.

    Thanks

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