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I wanted to ask why is the loan note amount of 800 is not added up in 6% loan notes in NCL ?? N secondly 800 is added in goodwill n reflected then why it is deducted from investment?? Shouldn’t it b addded to NCL instead??
From the fourth line of the question “but the issue of the loan notes has been recorded.” explains why it is not added to non-current liabilities – it’s already in the figure of $3,000
The reason the $800 is deducted from investments is because it has been included in the investment figure whereas it should have been treated as part of the purchase consideration.
The adjusting double entry should therefore be Dr Cost of acquisition account and Cr Investments account
OK?
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