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Hi sir,
I have doubt in first adjustment that why we have to treat as loan?? And why we have to deduct 3000 in revenue and deduct 2000 in cos ???
I don’t understand this 1adjustment.Secondly I have doubt in loan interest which is adjustment number 4) why we have to do (3000*10%*6/12) for cash payment and we always deduct but here we added why ??
what I did is (20000*5%) . Can you please explain me this 2 adjustmentsHi sir, just one question for loan interest
The answer is
5%loan. (20000-500)*8%. 1560
In substance loan.(3000*10%*6/12). 150Just want to know that for loan they took 3000 is because in question adjustment 1) they told that the repurchase price will be original selling price plus interest at 10% . So original selling price is given in adjustment which is 3000. Is it because of that ??
cadhakan wrote:Hi sir,
Hi,
This is because a sale has not been made as we still have control of the asset. We cannot therefore recognise any revenue or associated costs and set up a loan for the money received.
The loan note is being treated under amortised cost. The effective rate of 8% applied to the outstanding balance is the finance cost and is added to the value of the loan note. The cash paid of 5% is applied to the nominal value of $20 million and deducted.
Thanks
cadhakan wrote:Hi sir, just one question for loan interest
if we have recorded a loan for the $3 million received then we need to accrue the interest at the 10% for the six months it has been outstanding for.
Thanks
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