UK Amortisation of Loan (IFRS 9)

Jan 17, 2017
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United Kingdom

(apologies, the title meant to say "amortisation")

I am struggling with a practise accounting question I have found online. I am unsure of this will be accounted for and which figures would appear in the 2016 statements.

Trial Balance as at 30 September 2016: 2% loan note £114m

The 2% loan note was issued on 1 October 2015 at a discount of 5% redeemable on 30 Sept 2019 at a 18% premium. Issue costs were £2m charged to expenses. Effective rate of interest on the loan is 8% annually and is due on 30 sept each year. Interest has not been paid at 30 sept 2016.

I understand the whole adding effective interest ( Finance Cost ) and taking off interest payments but I am unsure which figure I need to start with as the balance sheet loan figure is 114m. Is this figure the starting amount of the loan or is it after been adjusted for finance and interest for the year ending 2016?

Thank you in advance for any help.
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