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Hello Sir,
What is the difference as an expression between amortised cost and present value for the debenture or loan ,and regarding calculation when we calculate the present value of the cash flows for the debenture ,does that value also called amortized cost.
Thanks a lot for help.
Hi,
Amortised cost is the name given to the specific accounting treatment used. The initial recognition of the debenture/loan will be at fair value, which will be the present value of the future cash flow. The amortised costs treatment is then applied to this opening figure where the effective rate of interest is applied and the balance reduced by the cash payment.
Thanks
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