this question is driving me crazy , need help , P2 ( financial liabilities )

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June 25, 2015 at 7:51 pm #258842
kudza1993
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A company borrowed $47 million on 1 December 20X4 when the market and effective interest rate was 5%. On 30 November 20X5, the company borrowed an additional $45 million when the current market and effective interest rate was 7.4%. Both financial liabilities are repayable on 30 November 20X9 and are single payment notes, whereby interest and capital are repaid on that date.
required : use fair value to account
please can anyone show me clear steps to deal with a question like this . thank you in advance
July 26, 2015 at 8:38 am #262102
neilsolaris
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Hi kudza.
Do you have a year end date in mind to prepare the accounts? My understanding is that you have to discount the future payments to that date to calculate the present liability, but I’m not sure which date to discount to. Thanks.
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