Beautiful presentation...I have been a student and a practitioner but this is the first time that this lesson has been presented so clearly. Best teacher...He does magic.
This is a very good example of amortised financial asset accounting explaining the relationship between effective interest rate, coupon rate and every year's cash flow of the financial asset such as investment in bonds or debentures
Everything explained well, except the Interest naming as Interest Receivable complicates things (as it seems we are talking about a SFP account, instead of SPL account). It would be better to name Interest as Interest Income, then would be clearly understood.
7:01 I think you should distinguish the discount interest 20,000.00 at the begging of the investment than the cp interest 160,000.00 matured in 4 years and the premium Interest at maturity 50,000.00. Then the 20,000 must be recorded initially and the total of 210,000.00 at the end, that is more clear and understanding. Regards..
He’s either misspoken, omitted another entry, or just wrong. If we assume another journal was passed and omitted from the video, then they could nominally book the interest as Dr Interest receivable/Cr Interest received then Dr Loan receivable/Cr Interest receivable, but I’m not sure anyone would waste their time. Either way, the effective interest in each period must be recognised as income on P&L, and it would be inappropriate to leave it credited to a B/S account. Your auditors would certainly be interested when doing a proof.
You are correct. Interest received is $40,000 while int. income is 56,154 & the difference, 16,154 is the amount debited to Investment as the first year's contribution towards amortizing the overall debenture discount of $70,000 (i.e. 1,050,000 - 980,000)
Beautiful presentation...I have been a student and a practitioner but this is the first time that this lesson has been presented so clearly. Best teacher...He does magic.
This is a very good example of amortised financial asset accounting explaining the relationship between effective interest rate, coupon rate and every year's cash flow of the financial asset such as investment in bonds or debentures
really appreciate your lecture, save me 2 weeks of reading non sense text book
Having the knowledge is nice
But, having the ability to communicate that knowledge in the most simple form is spectacular ❤
Chris The best F7 teacher ever!Love him!❤️
Awesome lecture!!!!!!! Clear and so concise, your amazing man.
This lecture is so easy to understand. Thank you.
You are Amazing Chris 👏🏽
Thanks for putting this together. It's great. Kudos
Lovvvvving this. Love s good refresher video.
Very helpful video, thank you 🙏🏾
Teaching style simple yet so so effective ❤
Brilliant lecturer!
chris you are a genius.. hope to meet in real and thank you for your help
Everything explained well, except the Interest naming as Interest Receivable complicates things (as it seems we are talking about a SFP account, instead of SPL account). It would be better to name Interest as Interest Income, then would be clearly understood.
Correct, I too got confused by naming it Receivable.. though its already explained in amortization table as SPL.. i.e. Income being credited in PL
Thank you for clarifying that.
But are you sure of that? Is it interest income for sure, as opposed to interest receivable?
thanks a lot Chris
Soo Good
Thank you very much sir
amazing......thank you very much sir....
Thank you very much great teacher
Amazing ! Thanks sir ❤
thank you very much!!!
Best! Best! Best!
Well Explained, Thank u so much!
7:01 I think you should distinguish the discount interest 20,000.00 at the begging of the investment than the cp interest 160,000.00 matured in 4 years and the premium Interest at maturity 50,000.00.
Then the 20,000 must be recorded initially and the total of 210,000.00 at the end, that is more clear and understanding.
Regards..
Hi would like to ask why interest receivable has an abnormal balance? Do we have an initial entry debiting the receivable for fill amount?
Yes I was wondering the same thing
He’s either misspoken, omitted another entry, or just wrong.
If we assume another journal was passed and omitted from the video, then they could nominally book the interest as Dr Interest receivable/Cr Interest received then Dr Loan receivable/Cr Interest receivable, but I’m not sure anyone would waste their time.
Either way, the effective interest in each period must be recognised as income on P&L, and it would be inappropriate to leave it credited to a B/S account. Your auditors would certainly be interested when doing a proof.
Thank you Chris!
🙌🏽👌🏽
Certainly not crediting interest receivable; crediting interest received, recognising revenue.
I have that same issue of the "interest receivable"...It should be interest income or interest received.
Hi sir Chris i please I don't understand how we got the 1.05 for the redemption. Can u please take me through that??
It was redeemed at a premium of 5%
@@FemiOGD 5% of $100 right? wouldnt that be $5
How do you account for the 20k you make from the discount? If you paid 980.000 for a 1.000.000 asset, then the 20k has to go somewhere...
Interesting tidbit: I messed around in excel and determined that the actual effective interest rate is 5.7212%, not 5.73%, so actually pretty far off.
it should be interest income not int rec.
You are correct. Interest received is $40,000 while int. income is 56,154 & the difference, 16,154 is the amount debited to Investment as the first year's contribution towards amortizing the overall debenture discount of $70,000 (i.e. 1,050,000 - 980,000)
Chris, your lectures are great ,but just need to speak alittle faster instead of monotone...
This is the best speed for learning by all
Cash flow sta
Where is part 1
You can find an index (with links) to all of our lectures on our free website. Click on 'show more' on the note before the comments to see the link.
Thanks a lot!