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Portfolio question 4 The consolidated statement of financial position of Ryanair plc for the year ended 31 March 2011 is set out below. Consolidated...

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Portfolio question 4 The consolidated statement of financial position of Ryanair plc for the year ended 31 March 2011 is set out below. Consolidated Balance sheet of Ryanair plc as at 31 March 2011 Non Current assets €m Property, plant and equipment 4933.7 Intangible assets 46.8 Available for sale financial assets 114 Derivatives 23.9 5118.4 Current assets Inventories 2.7 Prepayments 99.4 Trade receivables 50.6 Current tax 0.5 Derivatives 383.8 Cash 2940.6 3477.6 Total assets 8596.0 Current liabilities Trade payables 150.8 Accrued expenses 1224.3 Debt 336.7 Derivatives 125.4 1837.2 Non current liabilities Provisions 89.6 Derivatives 8.3 Deferred tax 267.7 Deferred gains on sale and leaseback of aircraft 126.6 Debt 3312.7 3804.9 Equity Issued share capital 9.5 Share premium 659.3 Capital redemption reserve 0.5 Retained earnings 1967.6 Other reserves 317 2953.9 Total liabilities and equity 8596.0 PTO Requirement a. List the (i) financial assets (ii) financial liabilities of Ryanair plc at 31 March 2011 on the basis of the information available in the above statement of financial position. For each of the financial assets and liabilities listed, explain how they should be measured in accordance with IFRS 9. 7 marks b(i) Explain what is meant by: (i) Credit risk (ii) Liquidity risk (ii) Interest rate risk (iv)Currency risk (v) Price risk and b(ii) Discuss the type of risk that each of Ryanair plc's financial assets and financial liabilities give rise to and suggest what Ryanair plc might do to manage the risks associated with its financial assets and liabilities. 13 marks of issue of the bond amounted to €40,000,000. Issue costs of €1,000,000 were paid. No interest is paid on the bond. The bond will be redeemed in five years on 1 April 2016 at a premium of €12,208,835. Requirement c(i) Calculate the effective interest rate on this bond. 5 marks d. Matt Ltd issued 30 million €1 bonds on 1 October 2010. The proceeds of issue amounted to €34.6m. Issue costs on the bond amounted to €0.20m. The bonds pay no interest but are redeemable on 1 October 2014. The total amount payable on redemption is €38.3 million. As an alternative the bond holders can elect to convert their holdings into equity shares on the basis of one equity share for every €2 bond held. Matt Ltd is a highly profitable company and bond holders are likely to opt for conversion on 1 October 2014. Market rates of interest for similar bonds without an option to convert to equity are 5%. Your assistant has shown the bonds as a long term liability in the consolidated statement of financial position at the amount of the proceeds received i.e. €34.6 million. No interest has been charged in the consolidated statement of comprehensive income in respect of these bonds. Extract from present value tables for use in part d of question This table gives the present value of a single payment received n years in the future discounted at x% per year Years 5% 6% 1 0.929 0.943 2 0.907 0.89 3 0.864 0.84 4 0.823 0.792 5 0.784 0.747 6 0.746 0.705 Requirement Explain how Matt Ltd should treat this bond in its financial statements for the ended 31 M Your reply should should show ledger accounts for the bonds issued Matt Ltd . Your reply should also show an extract from the consolidated statement of comprehensive income for the year ended 31 March 2011 and an extract consolidated statement of financial position as at 31 March 2011. 8 marks c. Skyfly plc has issued a zero coupon bond at par on 1 April 2011 . The proceeds c(ii) Show the ledger account for this bond for the year ended 31 December 2011.
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