CA Yogesh (Sr. Executive (F&A)) (213 Points)
13 June 2011I have read entire IAS 32 & 39, but I am confused in the following 2 DOUBTS :
1) Transaction cost on issue of equity shares is deducted from Equity..But what would be effect of transaction costs on issue of bonds, loan note, etc..??
2)Financial Liability: Treatment of difference between Amt taken as loan & fair value!!Eg 800 lacs i took as loan, but using market rate its present value is 676 lacs..so how to treat the diff. amt..?
Please help!!
CA Pranjal Joshi
(CA)
(331 Points)
Replied 15 June 2011
Hi,
As regards Querry No. 1 -
It will be generally FInancial Instrument at "Amortised cost" and hence issue cost will be adjusted to calculate the amortisation. Say for e.g calculation may look like following -
PV of Bond Proceeds at effective rate of interest - Issue costs + Int @ effective rate - contractual interest = Closing Balance.
CAclubindia
