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

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 and B) $1,065,600 and C) $1,012,000 and D) $961,400

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

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 77
Topic #: 1
[All CIMAPRA19-F02-1 Questions]

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:

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Suggested Answer: A, B, C, D

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

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Quiana
10 months ago
$961,400? Really? That seems low for a debenture!
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Patti
10 months ago
Definitely not B, that seems way too high.
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Roy
10 months ago
Wait, how does the effective interest rate affect this?
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Nana
10 months ago
I think it's option D, seems right to me!
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Bulah
10 months ago
The broker fee reduces the initial carrying value.
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Jerrod
10 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
11 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
11 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
11 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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Lavonna
11 months ago
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
11 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
11 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
11 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
11 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
11 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
11 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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Filiberto
11 months ago
This looks like a pretty straightforward question about creating a relationship for RLS. I think I can handle this one.
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Laura
1 year ago
I'm pretty sure I know the answer, but I'm going to double-check my work just to be sure.
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Ngoc
1 year ago
Ha! This question is a real brain-teaser. I bet the answer will surprise me.
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Lakeesha
1 year ago
D) $961,400
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Bettina
1 year ago
C) $1,012,000
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Jesusita
1 year ago
B) $1,065,600
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Judy
1 year ago
A) $958,400
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Chaya
1 year ago
Okay, let me try to work this out step-by-step. The effective interest rate is 7.2%, so I need to use that to calculate the carrying value.
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Shawnda
1 year ago
C) $1,012,000
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Thomasena
1 year ago
B) $1,065,600
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Casie
1 year ago
A) $958,400
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Anthony
1 year ago
Wow, this question is tricky! I'm not sure if I can figure out the carrying value based on the given information.
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Shantell
1 year ago
A) $958,400
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Kanisha
1 year ago
I'm leaning towards C) $1,012,000 because of the effective interest rate.
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Shalon
1 year ago
C) $1,012,000
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Marg
1 year ago
I'm not sure about that, I think it's A) $958,400.
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Lavonna
1 year ago
B) $1,065,600
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Amie
1 year ago
I think it's A) $958,400 because the broker fee is deducted from the principal amount.
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Desire
1 year ago
A) $958,400
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Marnie
1 year ago
That's a good point, I didn't consider the broker fee. You might be right.
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Gabriele
1 year ago
I disagree, I believe the answer is B) $1,065,600 because the broker fee should be added to the principal amount.
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Marnie
1 year ago
I think the answer is A) $958,400 because the effective interest rate is lower than the coupon rate.
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