Page 409 - F2 Integrated Workbook STUDENT 2019

Answers

Example 3.3

Amortised cost table

Year Opening Effective interest Coupon paid Closing
balance 9% (P/L) 3% balance (SFP)
$ $ $ $

1 478,000 (W1) 43,020 (16,200) 504,820
2 504,820 45,434 (16,200) 534,054

3 534,054 48,065 (16,200) 565,919
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136,519
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Note: Effective interest rate is multiplied by opening balance.

Note: Coupon rate is multiplied by par value of debt (3% × 540,000).

(W1) Opening balance = Fair value – transaction costs (Net proceeds)

$

Nominal value 540,000
Discount 10% (54,000)

Issue costs (8,000)
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478,000
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