Aquaria Limited purchased a five-year serial bond on 1 January 2012 at a cost of GH*5m...
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Aquaria Limited purchased a five-year serial bond on 1 January 2012 at a cost of GH*5m with annual nominal interest of 5%, which is also the effective rate, payable annually on 31 December. At the reporting date of 31 December 2012 interest has been received as expected and the market rate of interest is now 6%. Required: Account for the financial asset on the basis that it is classified: i) as Fair Value Through Profit or Loss (FVTPL); and that ii) to be measured at amortised cost, on the assumption that it passes the necessary tests and has been properly designated at initial recognition. Aquaria Limited purchased a five-year serial bond on 1 January 2012 at a cost of GH*5m with annual nominal interest of 5%, which is also the effective rate, payable annually on 31 December. At the reporting date of 31 December 2012 interest has been received as expected and the market rate of interest is now 6%. Required: Account for the financial asset on the basis that it is classified: i) as Fair Value Through Profit or Loss (FVTPL); and that ii) to be measured at amortised cost, on the assumption that it passes the necessary tests and has been properly designated at initial recognition.
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Face value 5 million Coupon rate 5 5000000 x 005 2500... View the full answer
Related Book For
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
Posted Date:
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