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Hi,
Hope my message finds u well.
If we issue a debt instrument and its floated at stock exchange at fair value.
I have two confusion regrading this situation .
In such a case do we pay interest ? i mean are the calculations same as how we do it in amortized financial liability and furthermore we restate year end whatever is the fair value ?
or there is no such calculation and its a financial liability held purely for trading and we simply restate our accounts what ever the closing value is at year end .
Would be deeply grateful if u could make up an illustration
Hi,
If we issue the debt then we are contractually obliged to pay interest on the debt at the rates agreed on issue. This will be based upon the par value and the coupon interest. So, the calculations are the same. The debt will then be revalued to fair value each year and any changes taken through profit or loss.
Thanks
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