Page 435 - SBR Integrated Workbook STUDENT S18-J19

Answers

Example 2

Loan notes

The financial liability is recorded at fair value less transaction costs. This gives
an initial carrying amount of $0.8 million ($0.9m – $0.1m).

The financial liability is then measured at amortised cost:
Bfd Interest at 20% Cash paid* Cfd
$m $m $m $m

0.8 0.16 (0.05) 0.91

* The cash paid = $1m × 5%.

In the year ended 31 December 20X1, interest of $0.16 million is charged to
profit or loss. The liability on the statement of financial position is $0.91
million.

Example 3

Fair value through profit or loss

The total fair value decline is $1 million. The $0.3 million related to own credit
risk should be recorded in OCI and the remaining $0.7 million recorded in
profit or loss.

Dr Financial liability $1.0m

Cr Profit or loss $0.7m

Cr OCI $0.3m

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