Beatnik

Debt is recorded at historical cost (issuance) with premium/discount being amortized over the term of the bond. Changes in market interest rates have an effect on the carrying value of the liability. However, these changes are recorded through the income statement as a Profit or Loss depending upon the effective interest rate. UNder both IFRS and US GAAP it is optional to report at fair value but changes in value due to market changes must be accompanied by notes in the FS. I would think that for better representation of FS, the fair value option woudl apply more to financials. Hope this helps.