Reference no: EM132684636

Problem 1: In accordance to IAS 2 the historical cost of inventories does not include:

1) Purchasing costs;

2) Selling expenses;

3) Conversion costs;

4) Other costs incurred in bringing inventories to their present location and condition.

Problem 2: On 1 January 2020, Adidas Ltd issued a bond with a nominal value of $500 000 and a coupon rate of 8% (annually in arrears) when the market rate was also 8%. The bond will be redeemed at a 10% premium above nominal value on 31 December 2022. Transaction costs paid by Adidas Ltd amounted to $30 000. The effective interest rate is:

1) 8,00%;

2) 10,99%;

3) 13,48%;

4) 10,43%.