Example from annual relevant reports This example is extracted from the financial ments of Heartland International healthcare centre where existing debts were reclassified and other debts considered as subsequent events as recommended by the SFAS 165 (Heartland International Health Centre Financial Statements, 2009). The excerpts from the financial statements are reproduced as under: NOTE 7 – NOTES PAYABLE Notes payable consisted of: 2009 A February 2024 date was the maturity date of the notes payable to Illinois facilities fund. The notes earned an interest rate of 6% and were subject to adjustment at the fifth year and 10th year anniversary dates.
The note bears an interest rate of 6%, subject to adjustment at the five-year and 1 O-year anniversary dates. £2,954 is the first monthly principal and interest payment. £346,372 Note payable to bank with a maturity date of November 6, 2009. Monthly interest rates is payable at varying rate subject to a minimum rate of 6% from 30th June 2009. The health care centre entered into a debt refinancing agreement in form of long term note successive to the year end.
£688,000 Total £1,034,372 Payments of principal in the future as required by the above obligation were as follows as at 30th June 2009. Successive refinancing arrangements on the note are also reflected below. 2010 2011 2012 2013 2014 Afterwards 9,560 46,438 49,263 52,258 55,437 801,416 Total 1,034,372 A total interest expense of £42,446 was incurred on the related debt for the year ended 30th June 2009. No interest expense was incurred in the year ended 30th June 2009. NOTE 11 - SUBSEQUENT EVENTS Management evaluation of subsequent events was done through 23rd December 2009 which was also the date in which the financial statements were to be availed.
The financial statements for the year ended June 30 2009 recognised the transactions and events that occurred after 30th June 2009 but before December 23 2009 because they provided evidence about conditions existing on the balance sheet date. The events that arose before the financial statements were issued but provided evidence that did not exist at June 30, 2009 have not been recognised in the financial statements for the year ended June 30 2009.
The health centre refinanced its notes payable to a bank on November 12, 2009 (see note 7) into long term promissory notes that were to mature on December 12, 2009 with the Illinois fund. The promissory note earned a 5.875% interest rate up to December 1, 2014. From December 1, 2014 through November 1, 2019, the interest rates that the promissory notes earned were to be pegged on the yield of the United States treasury obligation. The rate would then be readjusted on December 1, 2019.
Properties that were earlier purchased by the health care was the security of the promissory notes, finally, the health centre is required to make monthly interest payments of £5,759. References Heartland international financial health centre financial statement, 2009 retrieved from http: //www. heartlandalliance. org/hhc/files/hihc-financial-statement-fy07.pdf.