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On 1January 2016, Hamududu bought a K100,000 5% bond for K95,000, incurring issues cost of
K2,000. Interest is received in arears. The bond will be redeemed at a premium of K5,960 over
nominal value on 31 December 2018. The effective rate of interest is 8%.
The fair value of the bond was as follows:
31/12/ 2016 K110,000
31/12/2017 K104,000
Rrequired, explain with calculations, how the bond will been accounted for over relevant years
(30 marks
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