- This topic has 5 replies, 4 voices, and was last updated 3 years ago by
.
- Posts
Question) A company invests $5000 in 10% loan notes. The loan notes are repayable at a premium after 3 years. The effective rate of interest is 12%. The company intends to collect the contractual cashflows which consist solely of repayments of interest and capital and have therefore chosen to record the financial asset at amortised cost.
What amounts will be shown in the statement of profit or loss and statement of financial position for years 1-3 ?
I understand the answers in the answer key. But i dont understand the presentation in the statement of financial position.
It stated the following.
Year 1
Non-current assets
Investments 5100Year 2
Current assets
Investments 5212Year 3
Non-current assets
Investments 0Since its measured under Amortised cost , shouldn’t all the figues be presented under Non-current assets ? Why is year 2 classified as current assets ?
Because at the end of year 2 the amount is payable within 12 months and it’s therefore current
OK?
A company invests $5,000 in 10% loan notes. The loan notes are
repayable at a premium after 3 years. The effective rate of interest
is 12%. The company intends to collect the contractual cash flows
which consist solely of repayments of interest and capital and have
therefore chosen to record the financial asset at amortised cost.What amounts will be shown in the statement of profit or loss and statement of financial position for years 1-3 ?
Sol:
y1 Non current assets: 600
y2 Non current assets: 612
y3 Non current assets: 625
in kit solution it the investment income is treated as non cuurent assets in SOFP. why is this so?
- You must be logged in to reply to this topic.