finance cost (consolidation)

In the June 2003 question Hillusion (it would have helped if you had given me the name of the question!) Skeptik issued those 10% loan before Hillusion acquired control of Skeptik

We can see that because the finance cost in the Skeptik statement of profit or loss shows an expense of $200 and that is clearly 10% of $2,000

This is the only loan note outstanding in Skeptik, $200 is interest for a full year, and Hillusion received only $75 for the 9 months’ ownership

So when Hillusion ‘acquired 50% of the Skeptik 10% loan notes at par’ as per the question, it must have done so by buying these notes from other people rather from the issue of those notes by Skeptik

We are able therefore to time apportion the finance costs and see that the post-acquisition element is 9/12 x $200 = $150 and 50% of that amount is paid to Hillusion

In the question Pandar from December 2009 ‘Pandar invested $50 million in an 8% loan note from Salva’

The expression ‘invested’ is used in this question rather than ‘acquired’ that is used in Hillusion and suggests that the loan note purchased by Pandar is a new loan note issued by Salva shortly after the take-over by Pandar

However, what we DO know for certain is that, within the Salva finance costs is $2,000 loan interest paid to Pandar and that that $2,000 is entirely post acquisition

OK?