On 1st April 20X1, J Ltd. subscribed for 40 million 1loan notes in C Ltd. The loan notes were issued at 90 paise and were redeemable at 1.20 on 31st…

On 1st April 20X1, J Ltd. subscribed for 40 million 1loan notes in C Ltd. The loan notes were issued at 90 paise and were redeemable at 1.20 on 31st March 20X6. Interest is payable on 31st March in arrears at 4% of par value. This represents an effective annual rate of return for J Ltd. of 9.9%. J Ltd.'s intention is to hold the loan notes until redemption. Until 31st October, 20X2 C Ltd. was a successful company with a good reputation for settling all its liabilities on their due dates. However, due to an event which occurred on 31st October 20X2, three of C Ltd.'s major customers became insolvent and this caused liquidity problems for C Ltd. During November 20X2, C Ltd. entered into negotiations with all its creditors, including J Ltd. J Ltd. agreed to forego the interest payments due on 31st March 20X2 and 20X3, with the payments from 31st March 20X4 onwards resuming as normal. What would be the initial measurement of financial instruments as subscription of loan notes in C Ltd.?