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.
My company agreed to clean a store for $1,375 per month. A check for $700 was received from the store as a deposit. What do I need to debit and credit in a general ledger?
Question 01: (1.1 and 1.3) What is accounting and how is accounting environment? Question 02: (1.2 and 1.4) Presenting the characteristics of the quality of accounting information
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
what are the activities?
Illustrations of Income statement Profit/Loss on disposal of non-current assets Material write down or reversal of write down on assets e.g. PPE inventory and debtors.
Qualified Opinion - AUDIT opinion which states, except for effect of a matter to which a qualification relates, FINANCIAL STATEMENTS are fairly presented in accordance with GENERAL
The Rohr Company's old equipment for making subassemblies is worn out. The company is considering two alternatives: a) Completely replacing the old equipment with new equipment
Impact of joint Audit on financial reporting quality
Q. Dividends in arrears on cumulative preferred stock a. are shown in stockholders' equity of the balance sheet. b. must be paid before common stockholders can receive a dividend.
1. This assignment is to be submitted as an individual assignment. 2. Marks will be deducted for poor quality presentation. For guidance on the requirements for the presentatio
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: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd