408 Interest

As interest is charged on the cost of production and the cost of production may be calculated by reference to the value of facilities provided by the company providing finance, interest is frequently charged on money which has never actually been spent. In view also of the length of accounting periods, interest may also be charged on money which has already been recovered by the company.

Facilities and services provided under a production financing agreement are charged at the most competitive rate for the company providing them, not the producer. They will be subject to an overhead charge

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