(IFRS) for Small and Medium-sized Entities (SMEs)

IFRS FOR SMES – JULY 2009This is equivalent to the sum of the present values of the five individual CU2,000 payments,as follows:CUPresent value of interest payment at 31 December 20X5 = 2,000/1.06 1,887Present value of interest payment at 31 December 20X6 = 2,000/1.06^2 1,780Present value of interest payment at 31 December 20X7 = 2,000/1.06^3 1,679Present value of interest payment at 31 December 20X8 = 2,000/1.06^4 1,584Present value of interest payment at 31 December 20X9 = 2,000/1.06^5 1,495Total 8,425Yet another way to calculate this is to use a table of present value of an ordinary annuityin arrears, five periods, interest rate of 6 per cent per period. (Such tables are easily foundon the Internet.) The present value factor is 4.2124. Multiplying this by the annuitypayment of CU2,000 determines the present value of CU8,425.134 © IASCF