[holivieris]

Hi ,

Thank you for the reply, that makes sense that example wasn’t correct to demonstrate my question.
My question is whether bond discount is at all used in IFRS, i.e. let’s say a company issues 1000 2% annual coupon loan notes at 95% of $1,000 par value with a 3 year maturity (eff.ir 3.8%) It receives $950,000 in cash. Would it be correct under IFRS (amortized cost) at recognition to post the following entries and then use the effective interest method to amortize the Bond discount over the term of the note?

Inception:

Dr Cash 950,000
Dr Bond Discount 50,000
Cr Bonds payable 1,000,000

End of Year 1:

Dr Interest expense 36,050
Cr Bond discount 16,050
Cr Cash 20,000

Many thanks in advance for your time.

[Author]

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