Reference no: EM132571182

Russell Terrier Ltd (RT Ltd) provides you with the following information regarding its financial assets and financial liabilities for the reporting period ended 31 December 2019:

1. At 1 January 2019 RT Ltd holds an investment in the shares of Bull Dog Ltd to the value of N$180 000, comprising of 50 000 shares. The shares were originally purchased on 1 March 2018 for N$2.80 per share, and transaction costs of N$20 000 were incurred. RT elected to measure the shares at fair value through other comprehensive income (OCI). On 30 September 2019, 10 000 shares were sold for cash, at N$4.10 per share. The market value of the shares on 31 December 2019 amounted to N$3.80.

2. At 1 January 2019, RT Ltd also held an investment in bonds from Livy Limited. The bonds were purchased with the intention to hold them until maturity and to collect the contractual cash flows. The particulars of the bonds are: Date of purchase 1 January 2017 Purchase price N$270 000 Nominal value N$300 000 Coupon Interest 8% p.a., payable annually in arrears on 31 December Redemption date 31 December 2021, at a premium of 5% of the nominal value On 31 December 2019 the terms of the bonds were re-negotiated due to the decline in the economic conditions and cash flow problems experienced by the issuer of the bonds, Livy Limited. The coupon rate was changed to 5% p.a., still payable annually in arrears on 31 December, while the bonds will now be redeemed at their face value.

3. On 1 January 2019, RT Ltd issued 200 000 6% N$50 debentures, at a premium of 4%. Interest is paid annually on 31 December and the debentures will be redeemed, at par, in four equal annual installments starting on 31 December 2019. The debentures were not designated at fair value through profit and loss on initial recognition.

 REQUIRED:

Question 1: answer with the journal entries relating to the above financial assets and financial liabilities for Russel Terrier Ltd for the year ended 31 December 2019.

Please note:

Journal narrations are not required. Show all the necessary calculations as marks will be awarded for these.

Round off all the amounts to the nearest Namibian Dollar, but use 4 decimal places for the calculation of the IRR, where relevant.

Journal entries can be performed per instrument and not in date order.