Question
A 3 year annual pay bond (nominal value CU40,000) is issued for cash proceeds of CU 38,987. It has an effective interest rate of 9%
A 3 year annual pay bond (nominal value CU40,000) is issued for cash proceeds of CU 38,987. It has an effective interest rate of 9% and pays an 8% coupon. a. What is the interest cost to be recognized in the statement of profit or loss for year 1? b. Including the final redemption of the bond what are the total cash outflows of the issue over the life of the bond? c. What is the closing debt liability in the statement of financial position at the end of year 1? At what value will a corporate bond be redeemed at the end of its full term? Where would the provision for a legal claim be made against the entity be disclosed in the statement of financial position for that entity? On the date of its issue, a corporate bond is recorded in the statement of financial position of the issuer at what value?
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