Prepare the statement of financial position extract

Assignment Help Accounting Basics

Reference no: EM132732408

Question - Pennington Limited issued $500 million worth of convertible loan notes on January 1, 2018. The $500 million represents the par value of the convertible loan notes at the date of issue. The notes have a coupon rate of 4% and an effective interest rate of 12% per annum. Interests are paid annually on the convertible loan notes. The convertible loan notes are expected to mature in three years. The notes are currently not recognised on the entity's statement of financial position, however, management is currently seeking consulting advice regarding the most appropriate method of recognising the loan notes.

Required -

a. Briefly explain how substance over form apply to the recognition of the notes.

b. Determine the carrying value of the note as at January 1, 2018.

c. Prepare the statement of financial position extract as at and for the period ended December 31, 2019 showing the effect of the loan notes.

Reference no: EM132732408

Questions Cloud

What is the molarity of the stock solution : 22.0 mL of stock solution is used to produce a .458 M solution after dilution with 50.0 mL of water. What is the molarity of the stock solution?

Calculate the expected costs : The fixed portions of these costs are $300 and $200, respectively. Calculate the expected costs when production is 5,000 units

What is the molarity of a solution prepared by diluting : What is the molarity of a solution prepared by diluting 40.0mL of 3.55 M KCI solution to a final volume of 200 mL?

What should you investigate before making a decision : What should you investigate before making a decision about the correcting entry? What is happening to the Cash account

Prepare the statement of financial position extract : Prepare the statement of financial position extract as at and for the period ended December 31, 2019 showing the effect of the loan notes

What is the atomic mass of b : What is the atomic mass of B if 19.9% of all B atoms have a mass of 10.01 amu and 80.1% have a mass of 11.01 amu?

Describe your business model and the strategies : Describe your business model and the strategies you are pursuing and Describe the industry environment in which you are competing

What is the maximum amount that can be deducted : P incurred incorporation costs of $10,000 to incorporate a new corporation, What is the maximum amount that can be deducted in computing income for current year

What you know about acid and bade : A chemist heated an unknown hydrate MgSO4 XH2O in a crucible. The watercwas driven off leaving anhydrous salt in crucible.

User Account

All Pages