Sbr (int/UK) Strategic Business Reporting

 

  

(1 mark) 

The interest charge on the liability each year reduces profits, which reduces 

earnings per share.  

(1 mark) 

Thus, in contrast to the first proposal, financial position and performance are 

likely to appear worse, potentially deterring future investors. 

(1 mark) 

The cash proceeds from the loan will be used to buy the building. The building 

will be recorded at cost of $15 million. 

(1 mark) 

As such, in the statement of cash flows, the net impact on cash and cash 

equivalents will be nil. 

(1 mark) 

However, there will be a $15 million receipt within cash flows from financing 

activities and a $15 million outflow within cash flows from investing activities.   

  

(1 mark) 

No interest payments are  due in the  current year, so no interest paid will be 

reported in the statement of cash flows.