CIMAPRA19-F02-1 Exam - Topic 1 Question 77 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam

Question #: 77
Topic #: 1

GH issued a 6% debenture for $1,000,000 on 1 January 20X4. A broker fee of $50,000 was payable in respect of this issue. The effective interest rate associated with this debt instrument is 7.2%.

The carrying value of the debenture at 31 December 20X4 is:

A$958,400

B$1,065,600

C$1,012,000

D$961,400

Show Suggested Answer

Suggested Answer: A, B, C, D

by Diane at Nov 23, 2023, 11:07 PM

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Quiana

5 months ago

$961,400? Really? That seems low for a debenture!

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Patti

5 months ago

Definitely not B, that seems way too high.

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Roy

5 months ago

Wait, how does the effective interest rate affect this?

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Nana

5 months ago

I think it's option D, seems right to me!

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Bulah

5 months ago

The broker fee reduces the initial carrying value.

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Jerrod

6 months ago

I think the carrying value should be lower than the face value due to the broker fee, but I can't remember if we also need to account for interest payments in this calculation.

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Georgene

6 months ago

I feel a bit confused about how the effective interest rate affects the carrying value over time. Does it mean we need to adjust the carrying value each year?

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Maryln

6 months ago

This question reminds me of a similar practice problem we did in class. I think we need to subtract the broker fee from the initial amount to find the carrying value.

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Jessenia

6 months ago

I remember we discussed how to calculate the carrying value by considering the effective interest rate and the broker fee, but I'm not sure about the exact formula.

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No problem, I've got this. The key is to use the effective interest rate of 7.2% to determine the carrying value at the end of the year. I'm confident I can work through this calculation and arrive at the right answer.

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Dana

6 months ago

I'm a bit confused on how to calculate the carrying value here. Do I need to use the effective interest rate or the stated interest rate? I'll have to review my notes to make sure I'm approaching this correctly.

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Joseph

6 months ago

Okay, let me think this through step-by-step. The debenture was issued at a discount due to the broker fee, so I'll need to use the effective interest rate to determine the carrying value.

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Jesse

6 months ago

Hmm, this looks like a question on amortized cost accounting for debt instruments. I'll need to carefully calculate the effective interest rate and the carrying value at the end of the year.

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Maryann

6 months ago

I'm a bit confused by the package structure here. I'll need to double-check my understanding of how packages and class accessibility work in Java.

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Caitlin

6 months ago

I'm pretty sure it's SHIFT + U, that's the standard unread shortcut for most email clients.

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Craig

6 months ago

Hmm, I'm a bit unsure about this one. The options seem to cover different aspects of integration challenges, but I'm not sure which one the Oracle Service Bus specifically addresses.

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