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financial instrument

This topic has 2 replies, 2 voices, and was last updated 8 years ago by MikeLittle.

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March 30, 2017 at 8:18 pm #379682
kaimingsong
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lets say, a company issue a loan note with $500,000 and will redeem the loan note after 5 years .
What is amount shall be recognise where the loan note was issue , just take the $500,000 or we shall discount the loan amount to the present value and recognise the present value of $500,000 ?
March 30, 2017 at 8:40 pm #379683
kaimingsong
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Also , if we recognise the present value of the loan note , what is the treatment for the balancing figure ?
March 31, 2017 at 12:50 pm #379767
MikeLittle
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Question 1 – recognise the present value of all the payments connected with this loan note. So set out a table of interest payments for the next 5 years and discount all of those payments to present value as well as the $500,000
Question 2 – other components of equity
OK?
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