How is perpetual debt subsequently measured?

Perpetual debt is subsequently measured at amortized cost using the effective interest method. This approach aligns with accounting standards that require financial liabilities to be recorded at their amortized cost, which is calculated by taking the initial measurement of the debt and adjusting for any principal repayments and the cumulative amortization of any difference between the initial amount and the maturity amount, using the effective interest rate.

The effective interest method is particularly important for perpetual debt, as it allows for systematic recognition of interest expense over the life of the instrument. This method reflects the time value of money and results in a more accurate representation of the financial obligation on the issuer's balance sheet. For perpetual debt, which typically does not have a maturity date, this means recognizing interest expense based on the effective interest rate applied to the carrying amount of the debt over time.

Other methods mentioned, like fair value and historical cost, do not accurately capture the ongoing costs associated with the debt or the changes in the value of the debt over time. Net realizable value, which reflects the estimated selling price in the ordinary course of business less estimated costs to complete and sell, is also not applicable here as it pertains more to inventory and receivables rather than debt instruments. Therefore, using amortized cost with