[Zoe]

Was 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.’

[Author]

Posts