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Debenture redeemed at par

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Debenture redeemed at par

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  • July 19, 2022 at 5:36 pm #661339
    YG79
    Member
    • Topics: 4
    • Replies: 0
    • ☆

    Hi,

    If one issues 100,000$ debentures at Par and incurs 10,000$ issue costs the opening balance will be 90,000$. If we use EIR method to amortise it, then

    What will be the Par value that those debentures could be redeemed at the end of last year?

    100,000$
    90,000$ or
    Closing balance in the amortisation table?

    Txs.

    July 24, 2022 at 6:00 pm #661740
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6493
    • ☆☆☆☆☆

    Hi,

    If they are redeemed at par then it will be the $100,000 par value. The $10,000 issue costs are an accounting adjustment and not an adjustment to the par value of the debentures themselves.

    Thanks

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