A Ltd issued a 5% loan note on 1 April 2012 at its face value of K25 million. Direct costs of the issue were K1,500,000. the loan note will be redeemed on 31 March 2015 at a substantial premium. The effective interest rate applicable is 10% per annum. Explain the accounting treatment of the above instrument
A Ltd issued a 5% loan note on 1 April 2012 at its face value of K25 million. Direct costs of the issue were K1,500,000. the loan note will be redeemed on 31 March 2015 at a substantial premium. The effective interest rate applicable is 10% per annum. Explain the accounting treatment of the above instrument
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A Ltd issued a 5% loan note on 1 April 2012 at its face value of K25 million.
Direct costs of the issue were K1,500,000.
the loan note will be redeemed on 31 March 2015 at a substantial premium. The effective interest rate applicable is 10% per annum.
Explain the accounting treatment of the above instrument
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