Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › How to split the financial liability into current & non-current element?
- This topic has 1 reply, 2 voices, and was last updated 2 years ago by P2-D2.
- August 10, 2020 at 5:21 pm #579864accountguyMember
- Topics: 32
- Replies: 19
I am using Kaplan study text and I am trying to understand this.
After spliting the financial liability into current & non-current element in compound instrument Q’.
After calculating the equity element as the difference between the liability element & loan proceeds then I calculate the amortised cost to get the Balance c/f at the each year-end as such:
Year Bal b/f Finance costs cash paid Bal c/f
1 4228 338 (100) 4466
2 4466 357 (100) 4723
3 4723 377 (100) 5000
Now, the kaplan classify the current & non-current as like this:
Financial liability 4466(yr1) 4723(yr2)
Financial liability 5000(yr3)
I don’t know why it is classify AS SUCH…
If I were to do this I would have done something like this:
Financial liability 4723(yr2) 5000(yr3)
Financial liability 4466(yr1)
PLEASE EXPLAIN THIS TO ME!!!August 15, 2020 at 10:01 am #580645P2-D2Keymaster
- Topics: 4
- Replies: 6501
The debt is not due to be repaid until the end of the third year so in years one and two the financial liability is non-current. When the debt gets to the end of the third year it will then be current as it will be paid at the start of the next year.
- You must be logged in to reply to this topic.