ACCA FR知识点:Financial liabilities(金融负债)

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Financial liabilities

In the FR exam, financial liabilities will be held at amortised cost. These will be similar to the treatment shown earlier for assets held under amortised cost. Instead of having investment income and an asset, there will be a finance cost and a liability. The major difference in the accounting treatment relates to the initial treatment upon issue of the financial liability. Initially these are recognised at NET PROCEEDS, being the cash received net of any issue costs.

Therefore if an entity looks to raise $10m of funding, but pays a broker $200,000 for raising the finance, the initial double entry is to Dr Cash $9.8m and Cr Liability with the $9.8m. Taking the $200,000 immediately to the statement of profit or loss is incorrect because this fee must be spread over the life of the instrument. This is effectively done by applying the effective interest rate to the outstanding liability, which as we stated earlier will be given to the candidates in the exam.

Here, the effective interest rate on the liability now incorporates up to three elements. It would incorporate the annual interest payable, any premium repayable on redemption, and any issue costs. This is shown in the example below.

EXAMPLE

Oviedo Co issued $10m 5% loan notes on 1 January 20X1, incurring $200,000 issue costs. These loan notes are repayable at a premium of $1m on 31 December 20X3, giving them an effective interest rate of 8.85%.

In the above example, the 5% relates to the coupon rate, which is the amount required as an annual payment each year. This is always based on the face (par) value of the instrument, so means that $500,000 will be payable annually (being 5% of $10m).

As seen in the earlier example relating to financial assets held at amortised cost, the effective interest rate will be applied to the outstanding balance in each period. Again, a table is the easiest way to calculate this, as shown below.

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The entries in 20X1 will be as follows:

1 January 20X1 – The loan is issued, meaning that Oviedo Co receives $9.8m, being the $10m less the issue costs. Therefore the entries are Dr Cash $9.8m, Cr Liability $9.8m.点击免费下载>>>更多ACCA学习相关资料

Over the year, interest on the liability is accrued at the effective interest rate of 8.85%, giving the entry Dr Finance cost $867k, Cr Liability $867k.

31 December 20X1 – The payment of $500k is made, giving the entry Dr Liability $500k, Cr Cash $500k.

This leaves a closing liability of $10.167m. This will all be sat as a non-current liability, as none of it will be repayable until 31 December 20X3.

If we look at the interest column, we will see that the total interest paid is $2.7m ($867k + $900k + $933k). This is the total which will be expensed to the statement of profit or loss over the three year period. This amount consists of three elements:

$1.5m in annual payments ($500k a year)

$1m premium repaid (issued $10m loan, but repaid $11m)

$200k issue costs

As we can see, the issue costs have been expensed over three years, rather than being expensed immediately in 20X1.

相关阅读:【ACCA FR知识点:Financial assets(金融资产)

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