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.
1.) Assume a $1000 face value bond has a coupon rate of 8.5 percent, pays interest semi-annually, and has an eight-year life. If investors are willing to accept a 10.25 percent rat
IFRS guidelines IFRSs Gives the guideline on the content and the accounting statements of certain events and transactions in the financial statements. The following IFRSs are r
Disclaimer The liquidator may disclaim onerous property consisting of: 1. Land burdened with onerous covenants; 2. Stocks and shares; 3. Unprofitable contracts, or 4.
Closing Entries: Expenses Below is a list of accounts with corresponding ending balances. Account: Account Balance a.Insurance Expense: $1,300 b.Cash: 750 c.Accounts Receivable: 4,
COMPOSITIONS AND SCHEMES OF ARRANGEMENT The debtor may lodge a written proposal with the Official Receiver for a composition or other arrangement of his affairs within four day
Form No special form is normally required for the creation of a trust except that a declaration of trust respecting land or any interest therein must be manifested and proved b
A 4 year project has an initial asset investment of 306600, and initial net working capital investment of 29200, and an annual operating cash flow of -46720. The fixed asset is ful
Perform a business size-up of Sugar and Spice Bakery. 2. Qualitatively analyze the opportunity of closing the storefront to cater events.
????? # ..
trading a/c,p/l a/c and balace sheet
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