CHAPTER 3: ACCOUNTING FOR FINANCIAL LIABILITIES

Exercise 1: On 01/07/20X0, VHA bank issues bonds with the total par value of 800 billion VND, term of
2,5 years at the price of 805,403 billion VND. Interest is payable per 6 months in arrears at the rate of 7,5%
per annum. The effective interest is calculated equal to 7,2% per annum.
Requirement:
a. Filling in the tables with the missing values which are used to recognize under IFRS
b. Recognizing the journal entries under IFRS if the liability is measured at amortized cost.
c. Recognizing in case that the bank buybacks these bonds at the price of 801,3 billion VND on 01/07/20X1.

Year ended Opening Balance Market Interest rate Repayment periodically Amortized cost
Opening *7.2%/2 7.5%/2*800

31/12/20X0 805.403 28.995 -30 804.398

30/06/20X1 804.398 28.958 -30 803.356

31/12/20X1 803.356 28.921 -30 802.277

802.277 28.882 -30 801.158

31/06/20X2

31/12/20X2 801.158 28.842 -30 800.000

-30
-800 -
01/01/20X3

b.
On 31/12/20X0
Initial recognition
Dr Cash 805.403
Cr Liability – Bonds 805.403
Subsequent measurement
+ Actual interest
Dr P/L – Interest expense 28.995
Cr Financial liability – Bond 28.995
+ Payments
Dr. Financial liability: 30

1
 Cr. Cash: 30

On 30/6/20X1
Subsequent measurement
+ Actual interest
Dr P/L – Interest expense 28.958
Cr Financial liability - Bond 28.958
+ Payments
Dr. Financial liability: 30
Cr. Cash: 30
c.
On 01/07/20X1
Derecognition of the bond
Dr. Financial liability_Bond 803.356
Cr. P/L gain 2.056
Cr. Cash 801.3

Exercise 2: On 01/01/20X0, HDF bank issues bonds with the total par value of 5.000 billion VND, term of
4 years at the price of 4.943,343 billion VND. Interest is payable annually in arrears at the rate of 8%. The
effective interest is calculated equal to 8,4% per annum.
Requirement:
a. Filling in the tables with the missing values which are used to recognize under IFRS.
b. Recognizing the journal entries under IFRS if the liability is measured at FVTPL given that the market
values of those bonds on 31/12/20X0 and 31/12/20X1 are 4.953 billion VND and 4.961 billion VND,
respectively.
c. Recognizing in case that the bank buybacks these bonds at the price of 4.960 billion VND on 01/01/20X2.

Period Opening Market Repayment Amortized Change Fair

ended Balance Interest periodically cost in FV (Market)
rate values

31/12/20X0 4,943.343 415.241 -400 4,958.584 -5.584 4953

30/12/20X1 4953 416.052 -400 4969.052 -8.052 4961

P/L =

b.

2
 On 31/12/20X0
Initial recognition
Dr Cash 4943.343
Cr Liability - Bonds 4943.343
Subsequent measurement
+ Actual interest
Dr P/L – Interest expense 415.241
Cr Financial liability - Bond 415.241
+ Payments
Dr. Financial liability: 400
Cr. Cash: 400
+ Recording increase in value of liability through P/L:
Dr. Financial Liability - Bond: 5.584
Cr. P/L Gain of FV of liability - bonds 5.584

On 31/12/20X1
Subsequent measurement
+ Actual interest
Dr P/L – Interest expense 416.052
Cr Financial liability - Bond 416.052
+ Payments
Dr. Financial liability: 400
Cr. Cash: 400
+ Recording increase in value of liability through P/L:
Dr. Financial Liability –Bond: 8.052
Cr. P/L Gain of FV of liability – bonds 8.052

c.
On 01/01/20X2
Derecognition of the bond
Dr. Financial liability_Bond 4961
Cr. P/L gain 1
Cr. Cash 4960
Total
cumulative
P/L =
816.657

Exercise 3: On 01/01/20X0, Mr. Quang cashes in 200 million VND to open a term saving deposit with the
term of 4 years, interest payable on the due date at the rate of 8%/year. The effective interest is calculated
equal to 7,187%.

3
a. Filling in the tables with the missing values which are used to recognize under IFRS.
b. Recognizing the journal entries under IFRS

Year ended Opening Balance Interest Expense Repayment periodically Amortized cost

31/12/20X0 200 14.375 0 214.375

31/12/20X1 214.375 15.407 0 229.783

31/12/20X2 229.783 16.515 0 246.298

31/12/20X3 246.298 17.701 -64 199.999

01/01/20X4 -200

b.
On 31/12/20X0
Initial recognition
Dr Cash 200
Cr. Deposits of customer 200
Subsequent measurement
+ Actual interest
Dr P/L – Interest expense 14.375
Cr Deposits of customer 14.375

On 31/12/20X1
Subsequent measurement
+ Actual interest
Dr P/L – Interest expense 15.407
Cr Deposits of customer 15.407

On 31/12/20X2
Subsequent measurement
+ Actual interest
Dr P/L – Interest expense 16.515
Cr Deposits of customer 16.515

4
 On 31/12/20X3
Subsequent measurement
+ Actual interest
Dr P/L – Interest expense 17.701
Cr Deposits of customer 17.701
+ Payments
Dr. Deposits of customer 64
Cr. Cash: 64

On 01/01/20X4
+ Pay pricipal to customer
Dr. Deposits of customer 200
Cr. Cash 200

Exercise 4: SJH bank issues bonds with the total par value of 1000 billion VND, term of 2 years at the
price of 989,2 billion VND. Interest is payable quarterly in arrears at 9% per annum. The effective interest
is calculated equal to 9,6%.
a. Making the initial and one subsequent recognition right after of the issuance under IFRS in cases that the
liability is measured at amortized cost.
b. Making the initial and one subsequent recognition right after of the issuance under IFRS in cases where
the liability is measured at FVTPL, given that the market value of these bonds at the time of recording (the
subsequent recognition right after) is 996.5 billion VND.
a.
1000
2.40% 2.25%
Year Opening Interest Repayment Amortized
ended Balance Expense periodically cost
Year 1 989.2 23.741 -22.50 990.441

Year 1
Initial recognition
Dr Cash 989.2
Cr Liability - Bonds 989.2
Subsequent measurement
+ Actual interest
Dr P/L – Interest expense 23.741
Cr Financial liability -
Bond 23.741
+Payments
Dr. Financial liability: 22.5

5
 Cr. Cash: 22.5

b.
Market Fair
Period Opening Repayment Amortized Change in
Interest (Market)
ended Balance periodically cost FV
rate values
Year 1 989.200 23.741 -22.50 990.441 6.059 996.5

Year 1
Initial recognition
Dr Cash 989.2
Cr Liability - Bonds 989.2
Subsequent measurement
+ Actual interest
Dr P/L – Interest expense 23.741
Cr Financial liability - Bond 23.741
+Payments
Dr. Financial liability: 22.5
Cr. Cash: 22.5
+ Recording increse in value of liability through P/L:
Dr. P/L Loss of FV of liabilities - bonds 6.059
Cr. Financial liabilities -bonds 6.059

Exercise 5: DFG bank has paid a quarterly coupon of 30 billion for valuable papers issued. Given that the
FV (at the beginning of the period) is 1.210,557 billion VND, the effective interest rate is 9.6% and the
current market value is 1213,159 billion VND, recording the journal entries under IFRS for cases:
a. Those valuable papers are recognized at amortized cost.
b. Those valuable papers are recognized at FVTPL.
a.
2.40%
Year Opening Interest Repayment Amortized
ended Balance Expense periodically cost
Year 1 29.053 -30.00 1,209.610
1,210.557

Year 1
Initial recognition
Dr Cash 1210.557
Cr Liability - Valuable papers 1210.557
Subsequent measurement

6
 + Actual interest
Dr P/L – Interest expense 29.053
Cr Financial liability - Valuable paper 29.053
+Payments
Dr. Financial liability: 30
Cr. Cash: 30

b.
Year 1
Initial recognition
Dr Cash 1210.557
Cr Liability - Valuable papers 1210.557
Subsequent measurement
+ Actual interest
Dr P/L – Interest expense 29.053
Cr Financial liability - Valuable papers 29.053
+Payments
Dr. Financial liability: 30
Cr. Cash: 30
+ Recording increse in value of liability through P/L:
Dr. P/L Loss of FV of liabilities - Valuable papers 3.549
Cr. Financial liabilities - Valuable papers 3.549

Exercise 6: TDK bank has buy backed valuable papers issued last year at the price of 589,235 billion VND.
Given that the book value of those valuable papers is 592, 378 billion VND and they are measured at
amortized cost. Whether the journal entries different in case those valuable papers are measured at FVTPL.
At amotised cost
Derecognition of the valuable papers
Dr. Financial liability - Valuabale papers 592.378
Cr. P/L gain 3.143
Cr. Cash 589.235

In case the bond are measured at FVTPL, the jounal entries when buy backed the valuable papers
will not change because if there is a change in the value of these valuable papers, it will have been
recognized at the end of the previous period.

Exercise 7: Today is the redemption date of valuable papers that FKL bank issued 5 years ago. The total Commented [A1]: Ngày mua lại
par value of those valuable papers is 1.600 billion VND, the interest rate offered is 12%/year (coupon repaid
per 6 months in arrears). Recognize the payment entries for those valuable papers given that the bank has
not recognized the interest expense (at effective interest rate) of 94,5 million VND for this period yet.

7
 1600
6.00%
Year Opening Interest Repayment Amortized
ended Balance Expense periodically cost
Period 10 94.5 -96
1,600
-1600

At period 10
Subsequent measurement
+ Actual interest
Dr P/L – Interest expense 94.5
Cr Financial liability – Valuable papers 94.5
+ Periodical Payments
Dr. Financial liability: -96
Cr. Cash: -96
+Redemption of valuable papers
Dr. Financial liability: 1600
Cr. Cash: 1600

Exercise 8: Ms. Kim has cashed in 300 million VND to open a term saving deposit with the term of 2 years,
the interest rate of 7,5%/year paid on the due date. The effective interest is calculated equal to 7,238%.
Requirement: Recognize the initial and the subsequent recognition right after under IFRS.
300
7.238% 7.50%
Year Opening Interest Repayment Amortized
ended Balance Expense periodically cost
Year 1 21.714 0
300.0 321.714
23.286
Year 2 321.714 -45 300.00
-300

Year 1
Initial recognition
Dr Cash 300
Cr Deposits of customers 300
Subsequent measurement
+ Actual interest
Dr P/L – Interest expense 21.714
Cr Deposits of customers 21.714

8
 +Payments
Dr. Deposits of customers 0
Cr. Cash: 0

Exercise 9: Mr. Huy has submitted a term saving deposit on the due date for withdrawal. Recognize under
IFRS given that the principal of this saving is 400 million VND, the interest rate 9% per annum paid in due
and the bank has not recognized the interest expense (at effective interest rate) of 40,251 million VND for
this year yet.
400
9%
Year Opening Interest Repayment Amortized
ended Balance Expense periodically cost
Period 10 40.251 -36
400
400

On 31/12/20X3
Subsequent measurement
+ Actual interest
Dr P/L – Interest expense 40.251
Cr Deposits of customer 40.251
+ Periodical Payments
Dr. Deposits of customer 36
Cr. Cash: 36
+ Pay principal to customer
Dr. Deposits of customer 400
Cr. Cash 400