Page 136 - FR Integrated Workbook 2018-19

Chapter 10

Example 5 cont.

In the year ended 31 December 20X3, interest income of $8,219 will be
recognised in profit or loss and a revaluation loss of $1,259 will be recognised
in other comprehensive income.

Note that the table above works towards the redemption value of $105,960,
rather than including the redemption value within the cash received in the final
year.

(c) The bond would be classified as fair value through profit or loss.
The asset is initially recognised at its fair value of $95,000. The
transaction costs of $2,000 would be expensed to profit or loss.

In the year ended 31 December 20X1 interest income of $5,000
($100,000 × 5%) would be recognised in profit or loss. The asset would
be revalued to $110,000 with a gain of $15,000 ($110,000 – $95,000)
recognised in profit or loss.
On 1 January 20X2 the cash proceeds of $110,000 would be recognised
and the financial asset would be derecognised, with nil profit on disposal.

Illustrations and further practice

For homework try TYU question 4 from Chapter 10.

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