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Dear tutor,
I have some doubtful in this sentence “issue costs of financial instruments are deducted from the proceeds of financial instrument”, it belongs to Expenses and issue cost of the combination in Consolidated statement of financial position chapter.
such as P loan 100,000 at 10% per annual to Acquire S, so in financial statements of P:
Cost of investment is 100,000
Liability is 100,000
and how to treat with the interest of the loan?thank in advance,
“and how to treat with the interest of the loan?” is nothing to do with “issue costs of financial instruments”
You’re confusing two very different matters here
The issue costs are such items as legal fees, accountancy fees and advertising related directly to the legal and accounting side of actually creating the financial instrument – where a company is borrowing money
Interest on the loan money borrowed is payable, typically half yearly, and is simply recorded by the double entry:
Dr Loan interest (finance costs)
Cr CashOK?
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