How Should Non-Current Financial Liabilities Be Recorded Initially

question 19

Multiple Choice

How should non-current financial liabilities be recorded initially?

• A)At face value.
• B)At fair value.
• C)At fair value less transaction costs.
• D)At face value less transaction costs.

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Definitions:

Yield to Maturity

The expected full yield on a bond when held until its maturity period.

Semiannual Coupon

A bond payment made twice a year to bondholders, representing the interest payment on the bond’s face or nominal value.

Par Value

The face value of a bond or stock as stated by the issuing company, which does not necessarily match the market value.

Annual Coupon

The yearly interest payment issued to bondholders, typically expressed as a percentage of the bond’s face value.