TEST 2: 18/05/2021

PAPER 5: FAC4863/NFA4863/ZFA4863
APPLIED FINANCIAL ACCOUNTING I

REQUIRED

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 Page 2 of 2 FAC4863/NFA4863/ZFA4863
TEST 2

QUESTION 1

Marks
(a) Discuss how Panther Ltd should classify the compulsory convertible preference shares. 7

Communication skills: clarity of expression 1

(b) Briefly discuss how Panther Ltd should account for the share appreciation rights in its
separate financial statements upto intial recognition. Calculations are not required. 5

(c) Prepare an extract of the statement of financial position of Leo Ltd as at 9

31 December 2020 showing how the convertible preference shares and share
appreciation rights will be presented.

Please note:
• Comparatives are not required.
• Ignore all tax implications.

Communication skills: presentation and layout 1

(d) Provide the journal entries to account for the bond for the year ended 13
31 December 2020 in the accounting records of Leo Ltd.

Please note:
• Journal narrations are not required.
• Journals should be dated.
• Ignore all tax implications.

(e) Discuss the tax implications of the bond transaction. Calculations are not required. 4

Please note:

• Round off all amounts to the nearest Rand.

• Your answer must comply with International Financial Reporting Standards (IFRS).
Total 40

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