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Issue cost

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Issue cost

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
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  • September 30, 2021 at 11:34 pm #636793
    humai
    Participant
    • Topics: 757
    • Replies: 248
    • ☆☆☆☆☆

    Sir in M21 Robson question, its mentioned that issue cost of 2% are payable on gross external financing. Issue cost are payable out of cash reserves. So in examiners answer its written that since issue cost is payable out of cash reserves therefore finance does not need to be grossed up

    On the other hand, in M18 Tippletine Qs, its mentioned that The loan notes would have issue costs of 4% of the gross finance. Issue cost would be paid out of available cash reserves. Here examiner has grossed up the finance. Why is that so? As in the above Qs examiner has not grossed up whereas in this Qs he has grossed up

    October 1, 2021 at 7:43 am #636802
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    The examiners answer for Tippletime is wrong because the issue costs should not have been grossed up. You would have got full marks not grossing up.

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