How would the liability portion of the compound instrument be recorded?
A)Once separated,this component is accounted for at fair value through profit or loss.
B)Once separated,this component is accounted for in accordance with its substance.
C)Once separated,this component is accounted for amortized cost.
D)Once separated,this component is accounted for at historical cost.

Question

Quizplus · Accepted Answer

Once separated, the liability component of a compound financial instrument is accounted for at amortized cost. This approach reflects the gradual reduction of the liability over time as it is paid down or amortized.

How Would the Liability Portion of the Compound Instrument Be