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Hi Sir
Loan note interest and dividends paid (notes (iv) and (v)) 13,380An equity dividend of 4 cents per share was paid on 30 May 2013 and, after the rights issue, a further dividend
of 2 cents per share was paid on 30 November 2013.Sir why what happens to the amount 2500 (13 880 – 10880) given to the question.
I add it to the financial costs of (900 overdraft + 3,676 ) but the answer ignores it ?10880 div paid
13,880 – 10,880 does not equal 2,500!
I assume the total should have read 13,380?
Without looking at the question, I assume the 2,500 is loan note interest and has been paid (reflected within the 13,380?)
It therefore will add to any other finance charges within the question and be shown as an expense within the statement of profit or loss
Isn’t it?
yes Sir, but the answer ignored those 2500 and just used 900+3676 as financial costs
that is why im confused. Its xtol june 2014What do you mean “The answer has ignored the 2,500”?
Working ii details exactly how the finance cost figure in the statement of profit or loss has been calculated and within that explanation is the treatment of the half year loan interest already paid.
Check out the answer again and, if you’re still struggling with it, post again
Sir this is the extract of sopl of ACCa
Finance costs (900 overdraft + 3,676 (w (ii))) (4,576)
I think the answer will be 900 + 3676 + 2 500
No! The calculated figure of 3,676 is the applicable interest on the loan. The entire 50,000 is not classified as a loan – some of it is classed as equity.
The 3,676 is calculated as 8% on the amount classified as loan and that’s the finance cost of the loan for the year.
The 2,500 is relevant only for the purposes of deducting the amount paid (2,500) from the “true” interest in order to find the net amount to be added to the figure classified as a loan.
Look at the figure for the loan on the statement of financial position!
Again, post again if you’re still not clear
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