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Chapter 3
Example 3.2
Benoit issues $540,000 of redeemable 3% debentures at a discount of 10% on
1 January 20X5. Issue costs were $8,000. The debenture will be redeemed on
31 December 20X7 at a premium of $26,000. Interest is paid annually in arrears
and the effective interest rate is 9%.
Required:
Show the effect of the transaction on the statement of financial position
and statement of profit or loss for the three year term of the debenture.
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