CARMEN LIMITED

Calculations

Date of cash flow CU
01/07/2013 (500,000 x 105%) 525,000
01/01/2014 (500,000 x 18% x 6/12) (45,000)
01/07/2014 (45,000)
01/01/2015 (45,000)
01/07/2015 (45,000)
01/07/2015 (500,000 x 95%) (475,000)

Calculation of the fair value on initial recognition of the liability

FV 475,000 CU500,000 x 95%
PMT 45,000 CU500,000 x 18% x 6/12
N 4 2 x 2
I/YR 6,40750 12,81497 ÷ 2
PV thus CU525,000

1. General journal of Carmen Limited

DR 

CU

CR 

CU

2013
01/07 Bank (SFP) 525,000,00
Debenture liability (SFP) 525,000,00
2014
01/01 Finance cost (P or L) 33,639,30
Debenture liability (SFP) 33,639,30
CU525,000,00 x 12,81497% x 6/12
01/01 Debenture liability (SFP) 45,000,00
Bank (SFP) 45,000,00
Balance on Debenture liability account: CU525,000,00 + CU33,639,30 – CU45,000,00 = CU513,639,30
30/06 Finance cost (P or L) 32,911,36
Debenture liability (SFP) 32,911,36
CU513,639,30 x 12,81497% x 6/12
30/06 Debenture liability (SFP) 45,000,00
Other payables (SFP) 45,000,00
Balance on Debenture liability account: CU513,639,30 + CU32,911,36 – CU45,000,00 = CU501,550,66
01/07 Other payables (SFP) 45,000,00
Bank (SFP) 45,000,00
2015
01/01 Finance cost (P or L) 32,136,78
Debenture liability (SFP) 32,136,78
CU501,550,66 x 12,81497% x 6/12
01/01 Debenture liability (SFP) 45,000,00
Bank (SFP) 45,000,00
Balance on Debenture liability account: CU501,550,66 + CU32,136,78 – CU45,000,00 = CU488,687,44
30/06 Finance cost (P or L) 31,312,57
Debenture liability (SFP) 31,312,57
CU488,687,44 x 12,81497% x 6/12
30/06 Debenture liability (SFP) 45,000,00
Other payables (SFP) 45,000,00
Balance on Debenture liability account: CU488,687,44 + CU31,312,57 – CU45,000,00 = CU475,000,00 (rounded)
01/07 Other payables (SFP) 45,000,00
Bank (SFP) 45,000,00
Debenture liability (SFP) 475,000,00
Bank (SFP) 475,000,00
Balance on Debenture liability account:
R475 000,00 – R475 000,00 = R0

2. General ledger of Carmen Limited

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