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In financial instrument , is the Finance cost the only expense that should be recorded in relation to loan notes for a particular year end?
What about the nominal rate deduction that is deducted annually ? How do we show this in our Income statement ?
Here is a question but do not border for the calculation because I know it.
Wonder issued $10 million 5% loan notes on 1 Jan. 2009 incurring issue costs of $400,000 . The loan notes are reseemable at premium giving them an effective interest rate of 8%.
What expense should be recorded in relation to the loan notes for the year ended 31 dec 2009?
Solution :
Finance costs
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