Given the current economic climate, and in order to retain staff, Fleetfox Limited (Fleetfox) offered a two-year
Question:
Given the current economic climate, and in order to retain staff, Fleetfox Limited (“Fleetfox”)
offered a two-year interest-free loan of €10,000 to each of its employees on 1 January 2017.
One hundred employees accepted the offer on this date. Under the terms of the agreement, the loan has to be repaid in full on 31 December 2018. If an employee who has availed of the loan offer leaves the company during the two-year period, then the loan must be repaid immediately.
None of the employees who accepted the loan offer left the company during 2017.
The market rate of interest for a two-year loan is 10% per annum. Fleetfox wishes to disclose the loans as ‘Loans and Receivables’.
Requirement Illustrate and explain clearly how the loans should be recorded in the financial statements of Fleetfox for the year ended 31 December 2017.
Step by Step Answer:
International Financial Accounting And Reporting
ISBN: 9781912350025
6th Edition
Authors: Ciaran Connolly