Reference no: EM133020262
Questions -
Q1) ABC Ltd has entered into an agreement to lease an item of equipment that produces teddy bears. The terms of the lease are as follows:
Date of entering lease: 1 July 2023.
Duration of lease: 10 years.
Life of leased asset: 10 years.
There is no residual value.
Lease payments: $5000 at lease inception, $5500 on 30 June each year (that is, 10 payments).
Included within the lease payments are executory costs of $500.
Fair value of the machine at lease inception: $27,470.
Required - Determine the interest rate implicit in the lease.
Q2) ABC Ltd is an Australian listed company. Its results for the financial year ending 30 June 2023 have exceeded expectations-profit before tax is $5.597 million and income tax expense is $1.847 million. As at 30 June 2022, there were 9.75 million ordinary shares on issue. On 11 May 2023, 3.25 million further ordinary shares were issued at a price of $2.30-paid to $2.00. The partly paid shares carry rights to dividends in proportion to the amount paid relative to the total issue price.
Required - Calculate the basic EPS for ABC Ltd for the year ending 30 June 2023.
Q3) Explain what is a hedging arrangement and how does it reduce foreign currency risk exposure?
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