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thanks for ur help mike!
one more thing- what is the effectinve interest rate and suppose when we issue a bond at discount, we have the effective annual interest of what we calculate on the the principal less discount, i.e what we have actually got. why is that? should the interest not be on the full amount???
The interest that is actually PAID is calculated on the face value of the bond
The amount charged to the statement of profit or loss is the calculated as the effective rate of interest on the net amount received after the discounted issue
I believe that that answers your question
OK?
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