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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › financial liability
sir if a company wants to raise $100m and knows that $1m would be the issue costs, then won’t the company raise $101m? and if so would be case why then do we write financial liabilities at their fair value less any issue costs in SFP? Cause if we raise $101m then interest has to be paid on that and hence that becomes our liability (short/long term whatever that is)
Hi,
No, we pay issue costs when we raise the money and so this reduces the amount of the financial liability.
DR Bank $100m
CR Financial liability $100m
and then we pay the issue costs
DR Financial liability $1m
CR Bank $1m
Thanks