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)
Ask the Tutor ACCA FR
financial liability
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
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