Ross Ltd enters into a contractual arrangement with Hum Ltd on 1 July 2020 to repay $400,000 in 3 years’ time to Hum Ltd. Ross Ltd currently has a AA credit rating and can borrow at 8%. On 30 June 2021, Ross Ltd.’s credit rating improves to AAA and its borrowing rate is now 6%. What is the impact of the re-measurement of the financial instrument for Ross Ltd. on 30 June 2021 given the change in credit rating? Group of answer choices There is a loss on re-measurement of $13,063 on the financial asset. There is a loss on re-measurement of $13,063 on the financial liability. There is a gain on re-measurement of $13,063 on the financial asset. There is a gain on re-measurement of $13,063 on the financial liability.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Ross Ltd enters into a contractual arrangement with Hum Ltd on 1 July 2020 to repay $400,000 in 3 years’ time to Hum Ltd. Ross Ltd currently has a AA credit rating and can borrow at 8%. On 30 June 2021, Ross Ltd.’s credit rating improves to AAA and its borrowing rate is now 6%.

What is the impact of the re-measurement of the financial instrument for Ross Ltd. on 30 June 2021 given the change in credit rating?

Group of answer choices

There is a loss on re-measurement of $13,063 on the financial asset.

There is a loss on re-measurement of $13,063 on the financial liability.

There is a gain on re-measurement of $13,063 on the financial asset.

There is a gain on re-measurement of $13,063 on the financial liability. 

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