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TUTORIAL 5 ( UNSEEN ) Ikhwezi Ltd issued 1 , 0 0 0 1 0 % R 1 0 0 debentures on 1 April 2
TUTORIAL UNSEEN
Ikhwezi Ltd issued R debentures on April The debentures were issued at their face value.Transaction costs amounted to R The debentures will redeemed at a premium of on March Interest on the debentures is payable annually in arears on March each year.
ABC Ltd measures their debentures on the amortised cost model. The effective interest rate on the debentures is
Required
Prepare the journal entries necessary to account for the debentures in the financial records of Ikhwezi Ltd for the financial years ended December and December under the following conditions:
A Ikhwezi Ltd capitalizes all accrued interest on the debentures directly to the debentures liability account.
B lkhwezi Ltd only capitalizes accrued interest on the debentures to the debentures liability account at each interest payment date ie company maintains a separate accrued interest account
Basic Financial Instruments
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