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For a company Y/E 31.3.15
Loan Interest receivable = 32800
Accrued at 1. April.14 = 10600
Accrued at 31.March.15 = (11,300)The answer book is telling me the answer to put in the corp tax computation for taxable profits is £32,800.
I can’t get my head around why. As in other questions I’ve answered, the answer has always been a combination of amount received and otherwise accrued within that accounting period.
Can someone please explain why the answer is £32800
The question is from The 2015/16 BPP Practice and Revision Kit, Mock Exam 1 Question 6.
Loan interest received 32.100
Accured at 31. March 2015 11.300 ( financial year 14/15)
Accrued at 1. April 2014 (10.600) (this is for the financial year 13/14)
Loan interest receivable 32.800.This is how I understand this question.
Thanks for replying.
Is the (11300) figure changed to +11300 because it is a receivable and that’s where the “correct the mistake” part of the question comes in, as in a receivable cannot be negative?
I think I got confused as seeing a (11300) made me think it was a payable so I was deducting it from my received figure.
Basically I was doing 32100 less 10600 (FY 13/14) less 11300 = 10200
It is an accrual as 10.600, but they are for two different acc.(financial) years.
Journal entry:
Dr Accrued Income (SOFP)
Cr Income (I/S)Hey guys way too complicated – just read the question!
The basis of assessment in corporate tax for loan interest is RECEIVABLE – we use the accruals basis.
In this question they have GIVEN you the RECEIVABLE figure of 32,800 so there are no calculations to perform!
In other questions they will give the amounts RECEIVED along with the opening and closing accruals from which you have to work out the receivable figure!
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