Aman Berhad intend to issue RM50,000,000 par value bond with coupon rate of 6% and matures in 5 years. If prevailing market interest rate of similar risk class bonds is 10%, present value is determines as follows: Bond Value = PVIFA (10%,5) 3000000 + PVIF (10%,5) 50000000 =RM 42418 000 Discount= 50000000-42418000 =7581574 Calculate and do the journal entry for annual interest expense and on redemption.
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Aman Berhad intend to issue RM50,000,000 par
Bond Value = PVIFA (10%,5) 3000000 + PVIF (10%,5) 50000000
=RM 42418 000
Discount= 50000000-42418000
=7581574
Calculate and do the
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