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Hello Mike,
I can’t see in the acca answers, that there was any interest paid for the 1500€ loan note, which was a part of the consideration.
The loan note has to be added to the consolidated statement regarding the acca answer. Why do they not deduct the interest (1500*0,1*6/12) from retained earnings ( db retained earnings 75 cr bank 75)?
Thanks A
If the credit entry is “bank” then the debit entry MUST have been made already
Is the loan interest not included within a finance charge expense figure?
Hello,
No, there is no charge on retained earnings (income statement is not questioned, so no information about finance cost). The loan is not recognised in the statement, because it is a part of consideration (goodwill) and there it is not debited to bank, it is debited to goodwill in the first place.
Is there a mistake in the official acca answers, or am I wrong?
@antonk1983 said:
No idea?Mike is not a cyborg with internet connected to his brain 24h a day 😉
Just out of interest, did you check revision lectures?
https://opentuition.com/acca/f7/acca-f7-revision-kit/Sorry…
I checked the lectures… I know the theory, it is a practical question wether the interest must be recognised or not…
Hi Anton, because is no indication of any loan interest accrual given in the question, we have to assume that it has already been included in arriving at this year’s 7,400 profit for the Paradigm year
Thanks Mike
This is really a weak form of question from the acca, since they assume, that the loan note is not recognised in the FS…
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