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Exam prep. question 1 – Financial liablity

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Exam prep. question 1 – Financial liablity

  • This topic has 2 replies, 3 voices, and was last updated 8 months ago by francihco.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • October 21, 2021 at 5:17 am #638669
    ty0311
    • Topics: 17
    • Replies: 4
    • ☆

    Hi Chris,

    With reference to the answer to the question on page 52 of the FR lecture notes, I noted that we add back the loan transaction cost of $200,000 to the retained earnings.

    Is it correct to say that it should not have been charged against P/L, but capitalised as part of the financial liability instead?

    Much appreciated for your guidance.

    Regards,
    Tim

    October 23, 2021 at 9:09 am #638849
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6119
    • ☆☆☆☆☆

    Hi Tim,

    Good to hear from you again and it sounds like you are making good progress through the class notes/videos.

    Yes, you are correct. The transaction costs should have been added to the initial measurement of the financial asset but were incorrectly expenses through profit or loss, so to correct we DR Financial Asset CR Retained earnings.

    Thanks.

    October 30, 2021 at 10:33 am #639465
    francihco
    • Topics: 8
    • Replies: 11
    • ☆

    Hi Chris, question is not asking for it but just out of practice and double checking the end result, why am I not getting ´nil¨ on the C/F on year 5? I applied 7% as redemption premium but I guess that´s just not right, is it?

    b/f 7% 4% C/f
    Y1 $3.800.000,00 $266.000,00 $-160.000,00 $3.906.000,00
    Y2 $3.906.000,00 $273.420,00 $-160.000,00 $4.019.420,00
    Y3 $4.019.420,00 $281.359,40 $-160.000,00 $4.140.779,40
    Y4 $4.140.779,40 $289.854,56 $-160.000,00 $4.270.633,96
    Y5 $4.270.633,96 $298.944,38 $-4.440.000,00 $129.578,34
    $1.409.578,34 $-5.080.000,00

    Many thanks in advance.
    Regards,
    Fran!

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    Posts
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