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Financial liabilities

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Financial liabilities

  • This topic has 2 replies, 2 voices, and was last updated 1 year ago by rashard.
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    Posts
  • March 24, 2021 at 2:45 pm #615127
    rashard
    • Topics: 16
    • Replies: 30
    • ☆

    Hi Chris,

    What is the difference between effective interest rate and the coupon rate? I’m getting confused.. Could you please explain me further on this?

    March 27, 2021 at 7:22 am #615294
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6119
    • ☆☆☆☆☆

    Hi,

    The coupon rate is the legal amount attached to the bond that must be paid by the issuer. The effective rate is the rate that is used for accounting purposes as part of amortised cost to spread the coupon rate and premium on redemption through profit or loss. It is not a rate of interest that is paid by the issuer.

    Thanks

    April 1, 2021 at 12:19 pm #615670
    rashard
    • Topics: 16
    • Replies: 30
    • ☆

    Thanks a lot Chris!

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    Posts
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