How to determine the fair value of the debentures

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Problem 1: On 1 July 2018 Power Ltd. issues $10 million in five-year debentures that pay interest each six months at a coupon rate of 5 per cent. At the time of issuing the securities, the market requires a rate of return of 8 per cent. Interest expense is determined using the effective-interest method.

  1. Determine if the debenture is issued premium or discount?
  2. Determine the Fair Value of the Debentures?

Problem 2: The financial period for ABC ltd Company will be ended by June 2020. During this financial period, as a result of the change in the currency exchange rate, ABC made $650 000 gain between the time of the sale of goods and the date on which payment was received for the first time. The company had not previously made sales denominated in foreign currencies.

Assuming that the quantitative guidelines on materiality in AASB 1031 have been satisfied, describe how this event would be reported in the comprehensive profit statement. In your answer, discuss the disclosure requirement for these kinds of events in future.

Reference no: EM132535080

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