Reference no: EM132862245
Question - An extract from the trial balance of Green Tea plc at 30 September 20X7 is as follows: Debit Credit Borrowings 750,000 Cash 80,000
Green Tea plc raised the borrowings on 1 January 20X3, repayable in three equal annual instalments, commencing on 31 December 20X7.
On 25 September 20X7, the directors passed a resolution to negotiate with the bank to roll over the repayment of the first instalment. The agreement was signed with the bank on 20 October 20X7 to defer repayment of the first instalment until 31 December 20X8. The financial statements were authorised for issue by the directors on 15 November 20X7.
Green Tea Limited has an overdraft facility of £50,000 with its bankers and it is anticipated that the overdraft will be maintained over the long term. The overdraft is used for the purposes of trading.
Green Tea plc distinguishes between current and non-current liabilities in the company's financial statements.
a) Discuss, giving reasons, how the borrowings should be disclosed in the financial statements of Green Tea plc for the year ended 30 September 20X7 in accordance with IAS 1, Presentation of financial statements.
b) Discuss how the overdraft should be disclosed in the financial statements of Green Tea Limited for the year ended 30 September 20X7 in accordance with IAS 1, Presentation of financial statements.
c) Extract from the statement of financial position of Green Tea plc at 30 September 20X7, showing only the liabilities section, relating to the borrowings.