On 1 January 2020 Chimwemwe issued three-year 5% K60,000 loan notes at nominal value when...
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Accounting
On 1 January 2020 Chimwemwe issued three-year 5% K60,000 loan notes at nominal value when the effective rate of interest is also 5%. The loan notes will be redeemed at par. The liability is classified at FVTPL.
At the end of the first accounting period market interest rates have risen to 6%. REQUIRED:
Explain and illustrate how the loan is accounted for in the financial statements of Chimwemwe in the year ended 31 December 2020.
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