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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › financial instrument
lets say, a company issue a loan note with $500,000 and will redeem the loan note after 5 years .
What is amount shall be recognise where the loan note was issue , just take the $500,000 or we shall discount the loan amount to the present value and recognise the present value of $500,000 ?
Also , if we recognise the present value of the loan note , what is the treatment for the balancing figure ?
Question 1 – recognise the present value of all the payments connected with this loan note. So set out a table of interest payments for the next 5 years and discount all of those payments to present value as well as the $500,000
Question 2 – other components of equity
OK?