Prepare an amortisation schedule for a debenture liability, showing the initial carrying amount, interest expense, and carrying amount at year-end for each year from 20X1 to 20X5.

Here is the solution to Question 1: Q1(a) Amortisation Schedule The initial carrying amount of the debenture liability is calculated as the issue price less transaction costs. Nominal Value = N80,000; Issue Price = 90% of N80,000 = N72,000; Transaction Cost = N4,500; Initial Carrying Amount (1st Jan 20X1) = N72,000 − N4,500 = N67,500; Redemption Value (31st Dec 20X5) = Nominal Value + Premium = N80,000 + N5

Prepare an amortisation schedule for a debenture liability, showing the initial carrying amount, interest expense, and carrying amount at year-end for each year from 20X1 to 20X5.

Here is the solution to Question 1: Q1(a) Amortisation Schedule The initial carrying amount of the debenture liability is calculated as the issue price less transaction costs. Nominal Value = N80,000; Issue Price = 90% of N80,000 = N72,000; Transaction Cost = N4,500; Initial Carrying Amount (1st Jan 20X1) = N72,000 − N4,500 = N67,500; Redemption Value (31st Dec 20X5) = Nominal Value + Premium = N80,000 + N5

Solved: Prepare an amortisation schedule for a debenture…

Here is the solution to Question 1:

Q1(a) Amortisation Schedule

The initial carrying amount of the debenture liability is calculated as the issue price less transaction costs.

Nominal Value = N80,000
Issue Price = 90% of N80,000 = N72,000
Transaction Cost = N4,500
Initial Carrying Amount (1st Jan 20X1) = N72,000 - N4,500 = N67,500
Redemption Value (31st Dec 20X5) = Nominal Value + Premium = N80,000 + N5

Prepare an amortisation schedule for a debenture liability, showing the initial carrying amount, interest expense, and carrying amount at year-end for each year from 20X1 to 20X5.

Q1(a) Amortisation Schedule

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