france onek Any. contract (Aaa ARR ae ci gromenk Uabiiny faquity S46, ng ach + Foanciat axet — Cosh - Conhactal raft to meniva cosh | jmanoat ascot - Coniretiot agit to exchange gwoncal omet | + Pronsok liabily;— Dakivar cout | gromciat ones = Brcttonge gnanciot insrument FINANCIAL ASSET 4. TnihoR meomuement: + © FV De ‘Tnvertment Ge Cane ~ Anctude + Or Truest ment Ce oak, ~ Encfade » Or Ex pense Ce Cosh FV AD PL Pv +> ocr Amortsad ee st— = Ont for bonds | hoa. w FV oer ev 4 ocz Or Lnvastment iv ’tert farm ° Deut > FV to PL Ctransacton cost > anpense,) Moy select fv fe oct Cransacton cost Capitalired ) wre 4: % company invests $5,000 in 10% loan notes. The == Notes are repayable at a premium after 3 ecive te ium after 3 yeas. The effective rate of interest fs 12%. The company intends to collect the contractual cash flows which consist solely of repayments of interest and capital and have therefore chosen to record the financial asset at amorted cost: What amounts will be shown in the statement of profit or oss ‘and statement of financial position for the financial asset for years ea ne: forwee —het Si E ‘Example 2: A company invested in 10,000 shares of a icted company | Jn November 20X7 at a cost of $4.20 per share. At 31 December YO"? fren 20K7 the shares have a market valve of $4.90. Prepare extracts from n (otoarhlinane the statement of profit or loss for the year ended 31 December 2007 and a statement of financial postion as at that date | I} = Normally eV > eL ~ Moy soloct Amorbsad Cost 4 2 teat parsed (4) busine modat mua toe pie di? ut ay x bole ©) contrchal cai gla 2gyectie Default -——_——_ Maysselect Transaction costs are capitalized. The investments are revalued to fair value each year end, with the gain/loss being taken to an investment reserve in equity and shown in other comprehensive income. Transaction costs associated with the purchase of these investments are expensed, not capitalised similar to a revaluation of PPE. The main difference is that there can be a negative investment reserve e 7 FVOCI investment is sold, the investment reserve is taken to PL MBISC GIANGHAACCA | ——— |Example 2: A company invested in 10,000 shares of a listed company in November 20X7 at a cost of $4.20 per share. At 31 December 20X7 the shares have a market value of $4.90. Prepare extracts from the statement of profit or loss for the year ended 31 December 2007 and a statement of financial position as at that date. 11.X7 Dr Investment 42000 Cr Cash 42000) 31.12.X7 Dr Investment 7000) a | Financial Assets Example 3: A company invested in 20,000 shares of a listed company in October 20X7 at a cost of $3.80 per share. At 31 December 20X7 the shares have a market value of $3.40. The company are not — planning on selling these shares in the short term and elect to hold them as fair value through other comprehensive income. § Prepare extracts from the statement of prdfit or loss for the year ended 31 December 20X7 and a statement of financial position as at that date.Oct g0xt De Vavestmrent | os wo xe § Cr Coe = 6 om faa Kt. Pe — perf Sa ps |>~ xoited Ge Lavestment |< xoxo $ te BS : Trwartmant 8,000 t S0cr Oct Surplus Ceond ) FINANCIAL LIABILITIES 4. Dnitet mentummant © ev 2 Subsequent ~ Soul Chasity at amortised cost. 08. Tatorest Gayman £6 Cost Upar 4 por 2 par 3 Upar 4 PREFERENCE stares 4. Trmdeemable 2 Padeamoble _C Clarsiged os {mancio® Malvithie , dividends » exp CPL) Example: On 1 April 20X7, a company issued 40,000 $1 redeemable Preference shares with a coupon rate of 8% at par. They are redeemable at a large premium which gives them an effective finance cost of 12% per annum. How would these redeemable prefl sence shares appear in the financial statements for the years ending 31 March 20X8 and 20x9?AA RES De Cah 40, 660 (Ce Raclaomable — Paprane Sores, 10, Os, De ce ony He ene ert lates | lo | | operat! cog Poument ea vias ft [ee [ee De Radeon 3400 Upsc 4. 0, 000 AR oD (Seed) 41650, mrs Upor 2: RO teen na" LSet ) COMPOUND ENsTRUMENT ~ Le gmancia® iattument boo afin. Anh chét eo eb wor 08 mB CEx. convertible toon.) > Loon + opton Cquygr Raat Adi) equity, 1 Be: De Cok | | [ent Ce Comertib Loan 7 Labichy mp Baked on PV of satire caak. feo asiuming on conversion, Spf o.ceoun tng < dara Cognty dncount rode ox non converte J 7 Eauity mmaning oe YinCosh 36 080 Uakibey 7 Ce Convarttble Loon % ooo Baus ? ce Discount (3% wv Pagver, ) por. 4 eo. » Oar 3 oO Upor a RO O84 » Upor 8 $320 ae © & Gio lg, 5 OAbre 2 4SUs Gl) at) Ending, ob Fone. cost Poy ment £6 Upor 4 29 Sto 2659 (RROD S4ROSY Upor 2 yer 8 Oe Finonen, cost — fyusg Ce Ubi hes Dr Labslites 0 Ce Cos FACTORING OF RECEIVABLE G ahe With 36 nb (ofand cho d thal.) Dr Cout ~ © dha, os track weciable |» te Secwed Soon. 4 mot mak, bamyd 6 5 to.