Date Transactions 1 March 2017 Acquired 100,000 ordinary shares of Sejahtera Bhd at RM2.50 per share and the brokerage commissions was RM1,500. The...
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Financial Accounting and Reporting 2: Financial Assets (All information are stated in the question below)


QUESTION 1


Salam Bhd is a manufacturing company, located in Johor Bharu. The company supplies electronic devices to many companies in Malaysia and overseas. Salam Bhd has the following transactions related to its investments during 2017 and 2018.

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Additional information:

1.  The fair value of shares and bonds as at 31 December 2017 were RM3.00 per share and RM168,000, respectively.

2.  Salam Bhd uses the effective-interest method to amortize bond premiums or discounts and the company closes its account on 31 December each year.


REQUIRED:

(a)    Prepare the related journal entries to record the purchase, the dividend received, the fair value adjustment and the selling of investment in Sejahtera Bhd.


(b)    Prepare the related journal entries to record the purchase, the amortization and the fair value adjustment of the bonds for the year ended 31 December 2017.


(c)    Prepare partial of Statement of Financial Position as at 31 December 2017 for Salam Bhd.


(d)   State TWO (2) criteria for financial assets classification in accordance with Paragraph 4 of MFRS 9 Financial Instruments.

Image transcriptions

Date Transactions 1 March 2017 Acquired 100,000 ordinary shares of Sejahtera Bhd at RM2.50 per share and the brokerage commissions was RM1,500. The company intended to sell these shares in the mid of 2018 to take advantage of the changes in the share prices. 1 July 2017 Purchased 8% bonds of Aman Bhd with a maturity value of RM200,000 by paying RM170,000. The bonds will mature in 5 years with a yield rate of 10%. The interest is paid on each 1 July and 1 January. The bonds have been classified as held for collection and selling (HFCS). 31 December 2017 Received cash dividend of RM0.20 per share of its investment in the ordinary shares of Sejahtera Bhd. 31 May 2018 Sold all shares of Sejahtera Bhd at the selling price of RM3.20 per share.

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