party at any time. Required: Explain and show how the three events should be reported in the financi
Why the amount of $35.3million is not used in the calculation of the carrying amount of financial asset?
Epsilon prepares financial statements to 31 March each year. The following event has occurred which are relevant to the year ended 31 March 2018:
On 1 April 2017, Epsilon loaned $30 million to another entity. Interest of $1·5 million is payable annually in arrears. An additional final payment of $35·3 million is due on 31 March 2020. Epsilon incurred direct costs of $250,000 in arranging this loan. The annual rate of interest implicit in this arrangement is approximately 10%. Epsilon has no intention of assigning this loan to a third party at any time.
Required:
Explain and show how the three events should be reported in the financial statements of Epsilon for the year ended 31 March 2018. You should assume that Epsilon only measures financial assets at fair value through profit or loss when required to do so by IFRS 9
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