Required:

i. Using amortised cost, account for the bond on Star plcs statement of financial position and statement of comprehensive income for the financial year ending 31 December 20X2. Show all workings.

ii. Explain how your answer to i. above would change if the bond was accounted using Fair Value Through Other Comprehensive Income (FVOCI).

Star plc purchased a bond on 31 December 20X1 for a price of 98.5 million. The following information is available about the bond: Principal (redemption amount) 100.0 million Coupon rate (annual) 4.00% Maturity Maturity date 31 December 20X6 Effective interest rate 4.340% Expected fair value of bond on 31 December 20X2 101.0 million 5 years Star plc's financial year ends on 31 December