Issue costs for the subsidised loan and convertible loan notes would be paid out of available cash reserves if that so then why are they grossing up the issue cost?
Issue costs
Debt: ($30,600,000/0.96) = $31,875,000
Debt issue costs: $31,875,000 X 0.04 = $1,275,000
Sir i think this should be,
(30600000*4%)=122400 as this was financed from reserves however if sufficient fund wasn't available then i believe the examiner approach is correct the above one?
Ask the Tutor ACCA AFM
Q2. Tippletine Co march / june 2018 or mock 3 BPP
4y ago#1You are correct and the examiners answer is wrong - the issue costs should be 1224 and not 1275. You would still have got the 1 mark for this if you had shown the issue costs as being 1224.
Thank u sir
4y ago#3You are welcome :-)
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