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Hey guys! I have a question in front of me that I don’t know how to approach. Does anyone have a clue how to do it?
Prosen, completed the construction of a new manufacturing facility on 28th February 20X7. The project was financed through the issue of a $4 000 000 6% 4 year bond. This was issue on 1 June 20X6 at a discount of 3.5%. The internal rate of return of the debt is 7%. Market interest rates on debt with the same risk profile were 7% during the accounting period, but increased to 8% at the year end. The bond has been accounted for at fair value through profit or loss (fair value measured as the present value of the future cash flows with fair value changes recognised as financing items) and the finance costs for the year have been capitalised as part of the building costs. The building is being depreciated over 30 years.
My initial thought are that its the process called “securitisation” but I dont know how to record it. Any help will be appreciated!
Hi, what’s the name of the question – then I can look at it and think how you should attack the question
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I also am having difficulty with this question.
Its in the P2 course exam 2 for BPP June sitting. Did anyone have any ideas?
Thanks!Dear Malgo,
Could you please help to get this mock papers from BPP/ kplan if you know. Please thank you. I try on the net , but cant get it,
NeyaziWas anyone able to solve this question?
‘Prosen, completed the construction of a new manufacturing facility on 28th February 20X7. The project was financed through the issue of a $4 000 000 6% 4 year bond. This was issue on 1 June 20X6 at a discount of 3.5%. The internal rate of return of the debt is 7%. Market interest rates on debt with the same risk profile were 7% during the accounting period, but increased to 8% at the year end. The bond has been accounted for at fair value through profit or loss (fair value measured as the present value of the future cash flows with fair value changes recognised as financing items) and the finance costs for the year have been capitalised as part of the building costs. The building is being depreciated over 30 years.’
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