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Loan

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Loan

  • This topic has 3 replies, 2 voices, and was last updated 4 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 26, 2021 at 4:20 pm #611855
    andreaskraken
    Member
    • Topics: 57
    • Replies: 30
    • ☆☆

    Good day to you

    The following information is available about Andrew business as at 30/sep/2006

    Loan(repayable in 4 equal instalments starting 1 Jan 2007). 100000

    What are the correct figure for current asset or current liability

    (note that what I have written is part of a question since i felt that this was part only was relevant to my doubt)

    For the correct answer is an accrual of 25000

    In my answer i didn’t assume it was a prepayment or an accrual that is relevant for this year but I thought of it as an prepayment that is relevant for the year of 2007

    I thought since it paid in january 2007…i thought it is a prepayment(Relevant only for 2007)for the next year that covers till march 2007

    However when I looked at the markscheme this 25000 was an a current liability so I assume this is an accrual for the 3 months from october to december

    I also think that the information available for 30/sep/2006 is not the year end financial statement but 31/dec/2006 is actually the year end

    I just wanted you to check whether my thought for this question is correct..please let me know whether it is correct or wrong

    Thank you in advance

    February 27, 2021 at 8:25 am #611889
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    I need to see the whole question.

    However, I would assume that the question says that the loan is repayable in 4 equal annual instalments, which means they repay 25,000 per year.

    The first repayment is within 12 months of the date of the SOFP and is therefore a current liability. The remaining payments are all more than 12 months from the date of the SOFP and are therefore a non-current liability.

    I do explain this in my free lectures.

    February 27, 2021 at 10:39 am #611956
    andreaskraken
    Member
    • Topics: 57
    • Replies: 30
    • ☆☆

    Oh okay so 25000 per year is not relevant to accruals or prepayments I suppose

    Also I have watched the free lectures on accrual and prepayments..I think I must watch it again because I’m really weak in this area of the syllabus

    February 27, 2021 at 2:56 pm #611996
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Correct – this question is nothing to do with accruals and prepayments. It is purely asking about the presentation on the SOFP.

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