Isabelle Limited borrows 100,000 from a bank on the following terms: (i) Arrangement fees of 2,000 are
Question:
(i) Arrangement fees of £2,000 are charged by the bank and deducted from the initial proceeds on the loan;
(ii) Interest is payable at 5% for the first 3 years of the loan and then increases to 7% for the remaining 2 years of the loan;
(iii) The full balance of £100,000 is repaid at the end of year 5.
Required:
(a) What interest should be recognised in the statement of comprehensive income for each year of the loan?
(b) If Isabelle Limited repaid the loan after 3 years for £100,000 what gain or loss would be recognized in the statement of comprehensive income?
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Related Book For
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott
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