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BORROWING COST

Forums › ACCA Forums › ACCA FR Financial Reporting Forums › BORROWING COST

  • This topic has 0 replies, 1 voice, and was last updated 4 years ago by shaunak22.
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  • July 6, 2021 at 8:52 am #627075
    shaunak22
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    • Topics: 220
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    Apex received a $10 million 6% loan on 1 April 20X7. The loan will be redeemable at a premium which means the loan has an effective finance cost of 7.5% per annum. The loan was specifically issued to finance the building of a new store.
    Construction of the store commenced on 1 May 20X7 and it was completed and ready for use on 28 February 20X8, but did not open for trading until 1 April 20X8

    How should the loan be treated in the financial statements of Apex for the year ended
    31 March 20X8?
    A Present value
    B Fair value through other comprehensive income
    C Fair value through profit or loss
    D Amortised cost.

    the correct ans is D Could you please explain what is amortised cost?

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