Calculation of the change in finance costs, Financial Accounting

Q. Calculation of the change in finance costs?

Past ACCA examiners have occupied inconsistent approaches regarding the calculation of the change in finance costs due to settlement discounts or debt factoring. A few examiners have computed receivables net of bad debts discounts and factoring fees and others have worked gross. The present examiner has stated his policy as follows:

- Receivables must be calculated gross of bad debts

- Receivables must be calculated gross of factoring fees

- Receivables must technically be calculated net of settlement discounts (although the examiner would accept calculations gross of settlement discounts.)

This approach is follows in the answers below

(a) Working capital and bad debt changes

1218_Calculation of the change in finance costs.png

(i) Using untimely settlement discounts

449_Calculation of the change in finance costs1.png

1466_Calculation of the change in finance costs2.png

(ii) utilizing debt collection service

1195_Calculation of the change in finance costs3.png

Conclusion The debt collection service will raise profit by $0.444m + $1m - $0.665m = $0.779m and must be accepted.

Posted Date: 7/12/2013 1:14:30 AM | Location : United States







Related Discussions:- Calculation of the change in finance costs, Assignment Help, Ask Question on Calculation of the change in finance costs, Get Answer, Expert's Help, Calculation of the change in finance costs Discussions

Write discussion on Calculation of the change in finance costs
Your posts are moderated
Related Questions
Q. Participation of Employees in Management? To facilitate meaningful and effective participation of workers in the management process it was decided in March 1994 that the Cor

1.discuss how the vat system works 2.list and explain the vat supply categories, provide examples in each category write as an essay of 500 words

Thurston Howell IV is the sole heir to the Howell Enterprise fortune. He does not participate in the business, preferring to tend to his comic book collection. He does however own

equity share capital rs 10 200 10% preference share capital 80 15% debenture 20 profit before interest and taxes 60 proposed dividend 20 provision fo

Q. Show the Capitalized Cost? Capitalized Cost - Expenditure identified with services or goods acquired and measured by theamount of cash paid or market value of other property

1) The detailed information is on the second tab marked "Financials". Enter summarized Balance Sheet and Income Statement information for Cummins into the template on the "Summary

What is the function of bill receivable? What is the meaning of bill receivable?


Wilson Wonders's bonds have 15 years remaining to maturity. Interest is paid yearly, the bonds have a $1,000 par value, and the coupon interest rate is 12%. The bonds sell at a pri

Partners F and G receive an interest allowance of $10,000 and $15,000, respectively, and divide the remaining profits and losses in a 3:1 ratio. If the company sustained a net loss