Hi, The debenture interest notes states that the interest payable from 1 Mar 2014 - 31 Aug 2014 is paid in September 2014. Why do we need to include this in the statement if it is after the date we are required to create the balance sheets for?
Hi It's an application of the accruals concept, recognising amounts in the period they are incurred, regardless of when the actual payment is made. For the year to 31 August 2014, debenture interest incurred is 8% of 43,470,000. Half of this has been paid prior to 31 August. The other half (in respect of 1 March to 31 August) hasn't been paid, but it is still incurred (or relates) during the year to 31 August, so it shown as a current liability in the statement of financial position. Best wishes Lynn
