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Fair value through p/l
on 1 jan 20×1 Mcgrath issued financial liability at nominal value of $10m.Interest paid at a rate of 5%. The financial liability is the short term.31december 20×1 it market rate increased to 10%. the liability is repayable on 31 december 20×3
the liability at 31 dec 20×1date————B/F———-interest paid—–C/f
31/12/x1——10000———-500————-10500date————cash flow—————D.F————PV
31/12/x2———500——————1/1.1————455
31/x2/x3——–(10000+500)——-1/1.1^2——–8678
===================================9133
the fv of financial liability is 9.13dr FL—(10000-9133)-867
cr p/l–867my question here is that since the C/F on 31 december 20×1 is 10500 why we deduct 9133 from 10000 not 10500?when we debit p/l is it again impairment or loss allowance?
sorry I wrote debit; my question here is that since the C/F on 31 december 20×1 is 10500 why we deduct 9133 from 10000 not 10500?when we credit p/l what is that ?
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