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On 1 January 2021 Abacus Co purchases a debt instrument for its fair value of GHS1,000. The debt instrument is due to mature on 31

On 1 January 2021 Abacus Co purchases a debt instrument for its fair value of GHS1,000. The debt instrument is due to mature on 31 December 2025. The instrument has a principal amount of GHS1,250 and the instrument carries fixed interest at 4.72% that is paid annually. (The effective interest rate is 10%.)
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How should Abacus Co account for the debt instrument over its five-year term? (5marks)

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