Sky Ltd is a construction company. Sky Ltd plans to build a shopping complex, and in order to raise money, Sky Ltd issued debentures.
On 1 January 2009 Sky Ltd issued 10 000 $200 8% debentures. The debentures were issued at a discount price of $160. The debentures will be redeemed at par on 31 December 2013.
The effective interest rate on debentures is 13.79732% p.a.
The year-end of Sky Ltd is 31 December.
Required:
Provide the journal entries to record this transaction in the books of Sky Ltd for the financial years ended 31 December 2009 and 31 December 2010. Narrations are required.
Provide disclosure in the statement of financial position and statement of comprehensive income of Sky Ltd for the financial year ended 31 December 2009 and 31 December 2010.