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loan notes

This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.

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September 13, 2016 at 12:35 pm #340325
firelion28
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Argonaut Co issued $400,000 12% loan notes for $380,000
What are the accounting entries?
Sir how and why are they two diffreent amounts ie one of 380000 and 400000 and on what amount do we pay them interest??
September 13, 2016 at 1:37 pm #340336
John Moffat
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The accounting entries for debt issued at a discount are not in the syllabus for Paper F3 (it is quite complicated and isn’t tested until P2).
Interest is always calculated on the nominal value, whatever the circumstances.
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