Comet Bhd (CB) is a Malaysian telecommunication multinational company and has seven (7) subsidiaries under the company. CB closes its accounts on 31 December each year and uses an effective interest method to amortise bond premium or discount. In 2021, the management team of CB decided to issue bonds instead of shares since that was a way to raise capital without diluting the current shareholders' equity. The following are the selected financial liabilities transactions for the financial year 2021. Date Transaction
Comet Bhd (CB) is a Malaysian telecommunication multinational company and has seven (7)
subsidiaries under the company. CB closes its accounts on 31 December each year and uses an
effective interest method to amortise bond premium or discount. In 2021, the management team of CB
decided to issue bonds instead of shares since that was a way to raise capital without diluting the
current shareholders' equity. The following are the selected financial liabilities transactions for
the financial year 2021.
Date Transaction
1 January Issued Merdeka bonds, RM500,000 with 6% coupon rate, due on
1 January 2026. The interest of the bond is paid semi-annually on every 1 January and 1 July,
which the payment is starting on July 2021. The market rate of bonds yield 8%.
1 October Issued Amanah bonds with a par value of RM1,000,000, which mature in
seven years. The coupon rate is 7% with an effective yield of 5%. The interest is payable annually
on 30 September.
REQUIRED:
(Round all numbers to the nearest RM)
(a)
Determine the selling price of the bonds on the issuance date:
(i) Merdeka bonds
(ii) Amanah bonds
(b) Prepare the bond amortisation schedule for the Merdeka bonds up to 31 December 2022.
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