PrimblePrimble Experienced MentorPosts: 734Registered

I'm being dumb. How do you work out finance costs when they aren't given in the question?
In my text book it is given


  • peugeotpeugeot Experienced Mentor Posts: 624Registered
    What sort of question are you doing? An income statement or statement of cash flows?

  • PrimblePrimble Experienced Mentor Posts: 734Registered
    income statement is what i'm on at the moment but knowing both would be good. i'm really not gettin gfar with the books. none of it makes sense
  • Gem7321Gem7321 Experienced Mentor DevonPosts: 1,438MAAT, AAT Licensed Accountant
    Have you got an interest payable creditor? The difference between the prior year creditor and this years creditor will be the interest paid to go on your income statement.

  • Steve CollingsSteve Collings Experienced Mentor Posts: 997Registered
    Also, be aware of any interest that may need to be accrued (e.g. half yearly interest paid after the balance sheet date).

    If it is not making sense the best thing to do is to start right at the beginning and understand what the DFS paper is all about. Primarily, it examines accounting standards (IFRS/IAS) and tests your consolidation skills. The key IAS's examinable in section A are:

    IFRS 3 - business combinations (calculation of goodwill)
    IAS 27 - Consolidated and separate financial statements (so where you consolidate a subsidiary)
    IAS 28 - Investments in associates (where you have an associate rather than a sub)
    IAS 31 - Joint Ventures (not seen one of these in DFS for a while).

    To do the cash flow statement you are going to need to brush up on your incomplete records skills. In answer to your Q re interest paid, the calculation is:

    Interest creditor b/f
    Plus interest per P&L (include any interest accrual needed per the Q)
    Less interest creditor c/f
    Balancing figure = interest paid

    I have done an article on the consolidate income statement and the consolidated balance sheet which might shed some light on it for you.

    I am also publishing another article either today or over the weekend on cash flow statements where a link to a comprehensive example will be worked through which should also help you. I'll post up another thread once it goes up.

    Kind regards
  • PrimblePrimble Experienced Mentor Posts: 734Registered
    this is from a trial balance. it has loan notes and interest. is it just the interest then in this case?
    Steve you explain things well. I may be coming back to you in the future.

    Maybe i should have found an evening class for this...
  • Steve CollingsSteve Collings Experienced Mentor Posts: 997Registered
    You will just calculate the interest based on the loan notes, so if it is 12% interest, then calculate 12% of the loan capital in the trial balance.

  • Steve CollingsSteve Collings Experienced Mentor Posts: 997Registered
    I have posted a link to a thread on the AccountancyStudents forum which also contains a link to an IAS 7 (Cash Flow Statement) article which I have uploaded (there is also a worked example for you to look at). This should offer some guidance for you.

  • CathGCathG Well-Known Posts: 145Registered
    Steve... just curious, are you AKA peugeot?

    Ignore me- just looked at your posting announcing name change.
  • taskeytaskey Font Of All Knowledge Posts: 1,800Registered
    thanks steve, i have emailed onto myself so i can print it all out at work

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