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Compute the carrying amount of the bonds as at June

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Question - Ryde Ltd purchased 1,000 units of a 10-year bond with a face value of $1,000 each on 1 July 2020. The bonds pay 10% annual coupon in arrears. The bonds will repay the principal of $1million in ten years' time.

The effective interest rate for the bond was 12% at the time of the purchase. Ryde Ltd intends to hold the bonds for their periodic cash flows and have no intention to sell them until their maturity.

During the financial year ended 30 June 2021, the bond issuer experienced financial difficulty and has notified Ryde Ltd that it will be unable to meet future interest and principal repayments. Consequently, Ryde Ltd recognised a lifetime impairment of $537182 on the bond investment.

Required - Compute the carrying amount of the bonds as at 30 June 2021 recognised by Ryde Ltd?

Reference no: EM132857998

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