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Good Morning,
Cant get my head round the example for Ming in relation to the Average Method whereby starts with Loan of £120k on 1st May’18 and repays it all by 31st Dec’18.
Starts with £120 ends £0 is the average not (120+0)/2 x 2.5% = £1500?
Why are the using (120+70)/2 x 2.5% = £1563?
I fully understand the strict method.
Regards
CraigAt 31 December the amount of loan that was still outstanding that was then repaid, from what you show above must have been 70,000.
When a loan is repaid in the year you use the amount of loan outstanding AT that date NOT the amount after the loan has been repaid for that would always be zero
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