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Hello, Dear Tutor
In section C in the exam, there were convertible loans. I was given cumulative discount rate of 3 years, but the problem is that instead of using the 3 year discount rate shown, which I wasn’t familiar how to deal with, I myself drew up discount rate table year by year for 3 years. However, all the final figures did strike a balance in SFP. I don’t know whether I made a mistake, but, assuming that it was a mistake, will “finance cost” element in the adjusted retained earnings, equity component of loan, and year end loan liability in SFP incorrect? So, will I lose all the marks allocated to them just because I approached a little bit differently although concepts and calculation were just right.
No, you will lose the credit for the discounting aspect but will then pick up the marks for what you have done to calculate the finance cost, calculating the equity element using your own figures and the liability at the reporting date.