Again, the previous example:
I opened a garment factory, called Mumu Clothing, and forward-looking judgment that the fashion clothing will be popular, so I plan to expand the existing factory to meet the new trend of consumption.
However, the new plant costs money, and the shareholders (that is, me) are poor, so they can only solve the problem of funds by issuing bonds.
So I released 1250,000 bonds, each with a face value of 100 yuan, that is, a total face value of 12.5 million, with a maturity of 5 years (2013.).1.1-2017.12.31), the coupon rate is given to 472%, and the market interest rate of the same grade bond is 10%. The final amount of funds raised is 10 million.
The amortized cost is calculated as follows:
I was paying interest at this pace, but on January 1, 2015, I decided to repay half of the loan early at the end of the year.
Why?Because my ** is not wrong, the national tide clothing is popular, Mumu clothing has made a lot of money, and now the money in the account is enough to maintain normal expenses by paying off half of the debt.
Just like someone has money in hand to repay the mortgage early, if there is no better way out for the money, it is better to pay off the arrears first, after all, the money is interest-bearing.
Moreover, the interest rate of the money borrowed by Mumu clothing is not low, 10%, even if you go to the bank to buy wealth management products, it is difficult to buy products with 10% guaranteed income.
Mr. Lu Xun said that more than 5% is risk-return.
As an investor who buys wood clothing bonds, how to do it?
Entries up to 2015 remain unchanged:
At the time of release in early 2013:
Borrow: debt investment - cost 12.5 million.
Credit: Bank deposits of 10 million.
Debt investment - interest adjustment of 2.5 million.
At the end of 2013:
Borrow: Interest receivable 590,000.
Debt investment - interest adjustment of 410,000 yuan.
Credit: Investment income of 1 million.
At the end of 2014, the interest receivable was 590,000.
Debt investment - interest adjustment of 450,000 yuan.
Credit: Investment income of 1.04 million.
At this time, the amortized cost of the bond is 10.86 million, that is, at the end of 2014, the wood factory owes 10.86 million to investors, that is, the cash flow to be paid in the future is 10.86 million at a discount rate of 10%.
By the time Mumu Clothing decided to repay the loan early, everything changed.
The cash flow of the bonds issued by Mumu Garment is no longer :
At the end of 2015, 590,000 yuan of interest was paidAt the end of 2016, interest was paid 590,000;At the end of 2017, the interest was paid 590,000 + the principal was paid 12.5 million
Instead, it became:
At the end of 2015, 590,000 yuan of interest was paid and 6.25 million yuan of principal was repaidInterest payments at the end of 2016 were 2950,000;Interest payments at the end of 2017 were 2950,000+ payment of 6.5 million principal.
Are these cash flows still 10.86 million at a discount rate of 10%?
Let's do the math:
59+625)/(1+10%)+29.5/(1+10%)^2+(29.5+625) (1+10%) 3=11.39 million.
That is, after the decision to redeem in advance, standing at this point in time at the beginning of 2015, the money owed by Mumu Clothing to investors was no longer 10.86 million, but became 11.39 million.
What's going on?Mu Mu clothing conscience found that the early redemption of the bond, the amount of money owed is moreInvestors have also benefited
The essence of the question is:Money is becoming less and less valuable.
Standing at this point in time at the beginning of 2015, Mumu Clothing redeemed 6.25 million at the end of 2015 and 6.25 million at the end of 2017, which is not the same as the 12.5 million redeemed by Uni-President at the end of 2017.
The further back the money, the less valuable it is.
For example, if I ask you to borrow money, borrow 100,000 yuan, and repay you 100,000 yuan next year, it will definitely be different for you to repay 100,000 yuan after 10 years.
It's been 10 years, and the vicissitudes of life.
100,000 yuan 10 years ago can buy a small house, and 100,000 yuan 10 years later can buy a bathroom for a small house.
Therefore, Mumu Clothing chose to repay half of the money in advance, which was profitable for investors (who lent money to Mumu Clothing).
How should this benefit be reflected?
Borrow: debt investment - interest adjustment 530,000.
Credit: Investment income of 530,000.
Some Lao Tie asked, the amount of money that investors want to collect has increased, I can understand it;As the assets increase, so do the returns, which I can understand;But why should the increase in assets be recognized in the "debt investment - interest adjustment"?
Lao Tie who asked this question must not have read my article (Financial Instruments丨Each subject has its own mission!）
The mission of debt investment-cost is only to record the face value, unless the principal has been redeemed, it will not be moved, and all other changes must be completed through "debt investment-interest adjustment".
At this point in time at the beginning of 2015, the principal has not been redeemed, but Mumu Clothing has decided to repay the loan in advance at the end of the year, so the calculated income can only be entered into "debt investment-interest adjustment".
At the end of 2015, the interest was recalculated according to the new amortized cost of 11.39 million: 1139 * 10% = 1.14 million, so:
Borrow: Interest receivable 590,000.
Debt investment - interest adjustment 550,000.
Credit: investment income of 1.14 million.
At the same time, the money was repaid in advance:
Borrow: Bank deposit 6.25 million.
Credit: debt investment - cost 6.25 million.
At this time, the amortized cost is 1139 + 114-59-625 = 5.69 million.
The following years and so on are shown in the table below: