Denise.Carter82
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Amortised cost - sum of digits??

Amortised cost - sum of digits??

Hi

This might be a daft question to some but is the amortised cost method mentioned in these various webinars for FRS102 basically the sum of digits calculation? Therefore if we use sum of digits for most interest bearing loans already there is not likely to be a substantial change?

Thank you

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By JimFerd
03rd Mar 2016 08:58

That's right. 

That's right. 

The new rules mainly come into play for interest free loans, where they aren't repayable on demand.

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03rd Mar 2016 18:26

Great thank you very much

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By Briar
03rd Mar 2016 19:11

Does anyone use rule of 78 any more?

Before computers, sum-of-the digits was a useful approximation to the real rate of interest. But with IT it is now much easier and more accurate to use the real rate.

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