On 1 july 2018 Bombo ltd issues 2 million in six year debentures that pay interset each six months at a coupon rate of 8 percent. At the time of issuing the securities, the market requires a return of 6 percent.Interest expense is determined using the effective interest method.Provide journal entries at 1 July 2018,30june 2019 and 30 june 2020
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
On 1 july 2018 Bombo ltd issues 2 million in six year debentures that pay interset each six months at a coupon rate of 8 percent. At the time of issuing the securities, the market requires a return of 6 percent.Interest expense is determined using the effective interest method.Provide
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