Helen Lloyd considers the treatment
of unusual terms in bank debt and external loans
Many private companies will need external financing at some
point in their life cycles, because of the limited availability of
private equity finance. The focus during the arrangement of a bank
loan will probably be on the timing of cashflows and the ultimate
cost of borrowing, with a working assumption that nothing out of the
ordinary will arise. This can mean that borrowers sign up to loans
with some surprising details, which could have accounting consequences
under FRS 102, The Financial Reporting Standard Applicable in the
UK and Ireland, that would not have been even considered under current
UK GAAP.
