Question
Z Ltd purchased 1,000 units of a 10-year bond with a face value of $1,000 each on 1 July 2020. The bonds pay a 10%
Z Ltd purchased 1,000 units of a 10-year bond with a face value of $1,000 each on 1 July 2020. The bonds pay a 10% annual coupon in arrears. The bonds will repay the principal of $1million in ten years' time. The effective interest rate for the bond was 12% at the time of the purchase. Z Ltd intends to hold the bonds for their periodic cash flows and has no intention to sell them until their maturity. The fair value of the bonds is reduced by 10% from the amortised costs on 30 June 2022.
The carrying amount of the bonds as of 30 June 2022 recognised by Z Ltd is:
1.964317
2. 793665
3. 876652
4. 810582
5. 886996
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