Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
A changeable instrument is deemed part liability and part equity. IAS 32 necessitate that each part is measured individually on initial recognition. The liability element is measured by estimating the present value of the future cash flows from the instrument (interest and potential redemption) using a discount rate equal to the market rate of interest for a similar instrument with no conversion terms. The equity element is subsequently the balance, calculated as follows: $
PV of the principal amount $10m at 7% redeemable in 5 yrs
$10m x 0.713
7,130,000
PV of the interest annuity at 7% for 5 yrs
(5% x $10m) x 4.100
2,050,000
Total value of liability element
9,180,000
Equity element (balancing figure)
820,000
Total proceeds raised
10,000,000
The equity will not be remeasured, however the liability element will be subsequently remeasured at amortised cost using the effective interest rate of 7%. The total finance cost for the year ended 31 December 2010 is $642,600 (7% x 9,180,000). The coupon rate of interest of 5% has already been charged to profit or loss in the year so a further $142,600 should be recorded:
Dr Finance costs $142,600
Cr Non-current liability $142,600
(b) Preference shares
The substance of the instrument is a debt instrument. IAS 32 requires that any instrument that contains an obligation to transfer economic benefit be classified as a liability. The cumulative nature of the returns on the predilection shares means that the outflow of benefit is inevitable. The predilection shares would then be classified as debt and would in fact increase the gearing of the entity.
I would like you to take the second set of data from session 8 (the one you worked with in the first participation exercise) and do the following: 1. Determine the number of gr
#questBackground: The SEC set up the Work Plan which sets forth specific areas and factors to consider before potentially transitioning our current financial reporting system for U
Q. Participation of Employees in Management? To facilitate meaningful and effective participation of workers in the management process it was decided in March 1994 that the Cor
Appointment of Liquidator The liquidator is appointed by the court after the above meetings have been held: if the meetings do not agree, the court must settle the issue: if no a
The three certainties A trust will be valid only if the three certainties are present i.e. certainty of words, certainty of subject, and certainty of objects. 1. Certainty
Efficiency Ratios - These ratios include Receivables Turnover, Inventory Turnover, Asset Turnover and Net Working Capital Turnover ratios. Efficiency ratios demonstrate the utili
Q. What do you mean by Fiscal Year? Fiscal Year - Period of 12 consecutive months chosen by an entity as its ACCOUNTING period that may or may not be a calendar year. Fixed Ass
Terry Marks is a well-known architect. He wants to start his own business and convinces Rob Norris, his cousin and a civil engineer, to contribute capital. Together, they form a pa
48 Morgado Inc. has provided the following data to be used in evaluating a proposed investment project: Initial investment $130,000 Annual cash receipts $78,000 Life of th
Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd