Page 4 - FINAL CFA I SLIDES JUNE 2019 DAY 9
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Session Unit 8:
31. Non-Current (Long-Term) Liabilities, p.272
LOS 31.a: Determine the initial recognition, initial measurement and subsequent measurement of bonds, p.273
Bonds can either be issued at Par, Discount or Premium…
If Bond issued at Par (Face Value (FV) = $1000), Coupon rate = YTM/IRR
On initial recognition -Balance sheet: A = D + E
tanties
- Income statement: = Interest expense = Coupon * FV
- Cash flow statement: = Proceeds = CFI (inflows)
Coupon payments = CFO (outflows)
Maturity: FV repayment = CFI (outflows)
If issue at Discount/Discount Bonds If issued at Premium/Premium Bonds
Proceeds are less than FV: Proceeds are more than FV:
because YTM/IRR > Coupon Rate because YTM/IRR < Coupon Rate
