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JUN 2019
Question 3 (3 marks)
Norman bought 100,000 shares in a listed entity on 1 November 2015. Each share cost $5 to
purchase and a fee of $0.25 per share was paid as commission to a broker. The fair value of
each share at 31 December 2015 was $3.50. the shares are bought for trading purposes.
Explain how the above financial assets will be accounted for in the financial statements
7205 000
Question 4 (4 marks)
Norma issues 20,000 redeemable debentures at their $100 par value, incurring issue costs of
$100,000. The debentures are redeemable at a 5% premium in 4 years' time and carry a
coupon rate of 2%. The effective rate on the debenture is 4.58%.
Calculate the amounts to be shown in the statement of financial position and statement of
profit or loss for each of the four years of the debenture.

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Question 1 (7 marks)
Apple acquired 1,000 shares of XZY Bhd with a quoted price of RM5,500. in addition, ACE
incurred transaction cost of RM500. At the same time, Apple issued bonds for a total
consideration of RM4 million and incurred transaction costs of RM45,000 in issuing the bonds.
Additional information:
a. Apple classifies the shares of XYZ Bhd as measured at &quot;fair value through profit or loss&quot;.
b. Apple classifies the shares of XYZ Bhd as measured at &quot;fair value through OCI&quot;. to
c. Apple measures the bonds at &quot;amortised cost&quot;.
Prepare the journal entries on initial recognition.
Question 2 (13 marks)
Happy Ltd issues 4,000 convertible bonds at the beginning of year x2. The bonds have a three
year term and are issued with a face value of RM1,000 per bond. Each bond is convertible at any
time up to maturity into 250 ordinary shares. interest is payable annually in arrears at a normal
annual interest rate of 5%. The prevailing market interest rate for similar instruments without
conversion options is 7%.
a. Determine both the value of the equity and liability component of the bond.
(4 marks)
b. Statement of profit or loss extract for the year ended 31 December x2 to x4.
c. Statement of financial position extract as at 31 December x2 to x4.
(3 marks)
(6 marks)

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