On 1 January 2009 Hazell plc borrows 5 million on terms with interest of 3% fixed for
Question:
Initially Hazell plc estimates that the loan will be repaid on 31 December 2011; however, at 31 December 2010 Hazell plc revises this estimate and assumes the loan will only be repaid on 31 December 2013.
Assume that the variable rate remains at 6% throughout the period and that interest is paid annually in arrears.
Required:
(i) Determine the total expected finance costs and effective yield on the loan at 1 January 2009.
(ii) Show the impact of the loan on the statement of comprehensive income and statement of financial position for periods ended 31 December 2009 and 31 December 2010.
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Related Book For
Financial Accounting and Reporting
ISBN: 978-1292080505
17th edition
Authors: Barry Elliott, Jamie Elliott
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