Where the Change in the Carrying Amount of a Liability

question 10

Multiple Choice

Where the change in the carrying amount of a liability is due to the impacts of using present values,the change shall be recognised as a(n) :

• A) Gain on Sale of Liability.
• B) Revaluation Reserve Adjustment.
• C) Adjustment to opening retained Earnings.
• D) Borrowing Cost.
• E) Extraordinary Item.

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Definitions:

Par Value

A legal amount per share established by a company's charter, not necessarily related to market value, often used for accounting purposes.

Zero-Coupon Bond

A debt security that does not pay interest (coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its face value.

Yield to Maturity

The total return anticipated on a bond if held until it matures, considering all payments of interest and principal and the time value of money.

Par Value

The face value of a bond or stock, typically the value printed on the certificate, which does not necessarily reflect its market value.