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Mock 1 Q4b Reflator

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Mock 1 Q4b Reflator

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
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  • September 4, 2018 at 3:42 pm #471347
    richardscully
    Member
    • Topics: 197
    • Replies: 145
    • ☆☆☆

    Dear Sir

    The answer book in my opinion fails to show this correctly. The 9% subordinated loan requires principle to be paid with the interest. The answer shows the interest then retained earnings of 73. Should not the 39 of the principle on the 300k come off that retained earnings and therefore that amount is not added to equity??

    September 5, 2018 at 6:50 am #471494
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54726
    • ☆☆☆☆☆

    Repayment of a loan does not reduce profits (and therefore retained earnings) – it is only payment of interest that reduces profits.

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  • The topic ‘Mock 1 Q4b Reflator’ is closed to new replies.

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