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Hi,
How do I know when to use which rates for the calculation of Npv of the principal and the interest amounts? And which figures should be recorded in the p and l , and in the sofp.
Principal in statement of financial position
Interest in statement of profit or lossPrincipal, as calculated
Interest, (again) as calculatedThere are examples of this in the course notes and in the chapter questions
There’s even examples in Student Accountant articles on this very subject!
Use the effective rate to calculate the “correct” interest figures
Use the coupon rate to calculate the actual amounts of interest paid
Set up a table showing “brought forward”, + “interest at effective rate”, – interest actually paid at coupon rate”, = “carried forward”
Interest at effective rate is shown in statement of profit or loss
Carried forward appears on the statement of financial position
OK?
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