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Director's loans

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Director's loans

  • This topic has 3 replies, 2 voices, and was last updated 9 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • February 10, 2016 at 9:37 pm #299976
    abdulbasit16
    Member
    • Topics: 165
    • Replies: 155
    • ☆☆☆

    Sir I came a question where they have included director’s loan as part of equity in calculating ROE. So why are loans from directors part of equity although shown as non-current liability?

    February 11, 2016 at 7:16 am #300009
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    I would suggest that the treatment depends whether the load is in the nature of long term capital employed or whether it is a short term affair to get the company through a temporary financial crisis

    The scenario you quote suggests that the loan is in nature a part of capital employed, long term financing

    Ok?

    February 11, 2016 at 8:16 am #300011
    abdulbasit16
    Member
    • Topics: 165
    • Replies: 155
    • ☆☆☆

    Right. Thank you.

    February 11, 2016 at 9:30 am #300023
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    You’re welcome

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