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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Investment in Debt Instruments
Good Afternoon,
Company A has acquired a debt investment from Company B. The investment is paid for at a premium in relation to its par value. Therefore, there exists a premium.
Company A applies Amortized Cost Model under IFRS 9 for investments in debt instruments.
*Please note this is financial asset and not a financial liability.
How do I account for the above accounting scenario? I’m unclear as to how to proceed with amortizing this investment, particularly with the premium paid on acquisition of the bond.
Thank you.
Hi,
If we have an investment in debt that meets both contractual cash flow test and the business model test then it is held at amortised costs.
I’d recommend that you look at the notes and the videos as these cover how to treat it at amortised cost.
Thanks