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Entity A invested $18,000 in 10.00% loan notes. The loan interest is paid in arrears. The loan notes are repayable at a premium after 3

Entity A invested $18,000 in 10.00% loan notes. The loan interest is paid in arrears.

The loan notes are repayable at a premium after 3 years. The effective rate of interest is 12.00%.

Entity A intends to collect the contractual cash flows which consist solely of repayments of interest and principal.

REQUIRED:

(1) Measure the interest revenue recognised in the Statement of Profit or Loss of year 3.

(2) Measure the loan notes recognised in the Statement of Financial Position of year 2.

ANSWERS:

(1) The interest revenue = $

(2) The loan notes = $

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