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I have a question regarding example 3 of the examiner report (Jan-June 2019).
I’m baffled by how the answer was reached.
The question is as follows:
A business has a year end of 31 December 20X8. On 1 July 20X8 the business received a five-year bank loan of $30,000 and is required to repay $500 on the last day of each month. The first payment was made on 31 July 20X8 and the business has paid each monthly instalment on time.
How will the loan be reported in the statement of financial position at 31 December 20X8?
Can you please help me understand the answer?
The business took the loan on 1 July 20X8 and so as at their year end of 31 December 20X8 they had already paid 6 payments of $500, so the total still owing was $27,000.
The amount payable within 12 months from 31 December 20X8 is 12 x 500 = $6000 and this is a current liability. The rest of the amount owing ($21,000) is payable in more than 12 months from the date of the SOFP and so is a non-current liability.
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