The CEO of Redstone Ltd has just been discussing a planned new debenture issue with the financial
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The CEO of Redstone Ltd has just been discussing a planned new debenture issue with the financial advisers, and has come to you with some resulting accounting questions. Consider the following:
We are thinking of setting the interest rate on the debentures a little above current market rates, to make them more attractive. I’m told this will produce a balance sheet liability higher than the face value of the debentures. How does this happen?’
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Setting the interest rate on debentures above the current market rates can result in a balance sheet liability higher than the face value of the deben...View the full answer
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Related Book For 
Financial Accounting An Integrated Approach
ISBN: 9780170411028
7th Edition
Authors: Ken Trotman, Elizabeth Carson
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