Question 1

SECTION B - CASE 3: FinServe Solutions

FinServe Solutions Co is a fintech payment processor. The year-end is 31 March 20X7.
Regarding the factored receivables in the previous question (factored on 1 January 20X7 for $450,000 with recourse), the bank charges an effective interest rate of 8% per annum on the advance.

What is the finance cost to be recognized in the statement of profit or loss for the year ended 31 March 20X7?

Accepted Answer

Calculate interest on the liability amount ($450,000) for the period it was outstanding during the financial year (3 months).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating interest on the $500,000 receivables face value, or forgetting to pro-rate for 3 months.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FR — Financial Reporting Practice Exam 1

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