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How will the bonds be initially classified and recognized

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Question - Shoppers Ltd ("Shoppers") is a diversified listed Australian company. Shoppers will issue 200,000 bonds on 1 July 2021. The bonds will have an issue price of $98, a face value of $100 at their maturity date on 1 July 2026 and a coupon rate of 1.75%. Shoppers will incur $150,000 of legal fees and underwriting costs on 1 July 2021 to issue the bonds. In accordance with Shoppers Corporate Finance Model, the bonds will not be used for derivative purposes nor repaid before their 1 July 2026 maturity date.

How will the bonds be initially classified and recognized in the statement of profit or loss and statement of cash flow?

Reference no: EM132954422

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