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Hi. I just wanted to ask why the professional fees of the bonds in this question are capitalised but then the interest income goes through profit and loss and not through oci. I thought you could only capitalise cost associated with the financial asset if it was fvtoci.
Welcome to the Opentuition forums. Is the question you are referring to on this site?
Hi,yes. It refers to one of the revision videos called vernon. Maybe I should have posted this question in the ask the tutor forum?
The general forums are designed for students to help one another. If you want to ask the tutor something directly please use the ask the tutor forums. Hope this helps.
For anyone coming across this thread see here for answer-
Transaction costs are capitalised for both FVTOCI and Amortised Cost models.
In our case, it is an Amortised Cost model being used.Also, interest income is taken to SOPL as per amortisation requirements, just that the effective rate is used to get the figure while the coupon rate payment goes to statement of cash flows.
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