Happy Sdn Bhd purchased a debt instrument on $1$ January $2023$ at its fair value of

RM$5$ million. The face value of the instrument was RM$12$ million with an interest rate

of $2\mathrm{.}35\%.$ The instrument will mature in three years time with a redemption value of

RM$6\mathrm{.}25$ million. The market interest rate was $10\%.$ Transaction cost amounted to

RM$400,000.$ The directors wish to measure this transaction at amortised cost using

the effective interest rate method as it intends to hold the financial instrument to

maturity.

Required:

Discuss the accounting treatment in accordance with the relevant financial reporting

standards and where necessary, show how it should be disclosed in the financial

statements of Happy Sdn Bhd for the year ended $31$ December $2023.$ Please give calculation step by step in details.

Answer rating: 100% (QA)

To account for the debt instrument purchased by Happy Sdn Bhd we need to apply the relevant financial reporting standards specifically MFRS 9 Financial Instruments or the equivalent IFRS 9 According t... View the full answer