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Question 2 ‘Norma’ from financial liabilites chapter in notes.
It is an amortised cost example of recognition and measurement of a financial liability.
I worked it myself first and recognised it at present value (discounted the coupon CF and redemption value at end of year 4 using EIR) and deducted the transaction costs from the PV. Amortised it that way.
The solution deducts trans costs from FV of amount transferred and goes from there. Am I getting confused with the treatment of another liability/standard? Its 4 years old so i considered TVM.
Opening liability = cash transferred minus transaction costs. NO DISCOUNTING!!!! In SBR always follow the cash.
Exception = convertible loan where you have to do discount.