Answered step by step
Verified Expert Solution
Question
1 Approved Answer
QUESTION 1 + (a) Joplin Limited invested 1,000 in a debt instrument (issued at par) on 1 January 2018. The term of the debt is
QUESTION 1 + (a) Joplin Limited invested 1,000 in a debt instrument (issued at par) on 1 January 2018. The term of the debt is five years and the coupon rate of interest attached to the instrument is 6%. Upon redemption, Joplin Limited will receive the initial 1,000 investment back plus a bonus premium of 250. The effective rate of interest is 10.1%. + The fair value of the instrument on 31 December 2018 was 1,100.- Requirement Show how the investment should be measured and recognised in Joplin Limited's 2018 financial statements assuming the investment: (i) passes the business model and cash flow characteristics model tests and there is no designation of the investment as fair value through profit or loss; (ii) does not pass the business model or cash flow characteristics model tests
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started