QUESTION 4 (15 MARKS: 27 MINUTES) Hande Bhd sells and distributes medical supplies to hospitals and pharmacies. The company closes its accounts on 31...
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Financial Accounting & Reporting 2 (All information are stated in the attachment according to the Question number)


Topic: Financial Assets


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Topic: Financial Liabilities


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APPENDIX FOR PV AND PVOA TABLE:


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QUESTION 3 (15 MARKS: 27 MINUTES) Glove Bhd sells rubber gloves and operates in Bukit Kayu Hitam. The company closes its accounts on 31 December each year. The following information is related to the company's equity and debt investments for the financial year 2019. Date Transaction 2 January Glove Bhd purchased RM2,000,000 of 10% bonds from Purnama Bhd for RM2,162,200. The bonds mature in five years and provide the bondholders with a yield of 8%. The interest is paid by Purnama Bhd every 30 June and 1 January. The bonds have been classified as held for collection (HFC). 21 February Glove Bhd purchased 100,000 units ordinary shares of Bulan Bhd for RM1.25 per share. The brokerage and clearance fee for the purchase of the shares is 3% of the value of the shares. Glove Bhd foresees that the share price of Bulan Bhd shall increase in the next few years and thus, the company intended to hold the shares for at least 18 months. 30 November Due to a shortfall of cash, Glove Bhd sold its investments in Purnama Bhd at RM2,050,0000. The selling price includes accrued interest. 31 December Bulan Bhd declared a dividend of RM0.05 per share, payable in January 2020. The share price of Bulan Bhd was traded at RM1.45 on this date. REQUIRED: (Round all numbers to the nearest RM) (a) Prepare all the related journal entries for Glove Bhad for the financial year 2019. (13 Marks) (b) Briefly discuss whether (i) trade receivable and (ii) bank overdraft fulfill the definition of financial assets. (2 Marks)

QUESTION 4 (15 MARKS: 27 MINUTES) Hande Bhd sells and distributes medical supplies to hospitals and pharmacies. The company closes its accounts on 31 December each year and uses an effective interest method to amortise bond premium or discount. The following are the selected transactions on the books of Hande Bhd for the financial year 2019. Date Transaction 30 June The callable bonds issued with a nominal value of RM1,000,000, which were dated 1 July 2016, were matured and called at RM1,250,000 plus accrued interest to an effective yield of 4%. The bonds coupon rate was 6% and the interest was paid annually on 30 June. 1 September Sukuk-bonds with a par value of RM2,000,000, which mature in five years, were issued. The coupon rate is 6% with an effective yield of 8%. The interest is payable annually on 31 August. REQUIRED: (Round all numbers to the nearest RM) (a) Determine the price of the (i) callable bonds and (ii) sukuk-bonds on the issuance date. Prepare the bond amortisation schedule for the callable bonds. (5 Marks) (b) Prepare all the related journal entries for Hande Bhd for the financial year 2019. (8 Marks) (c) Hande Bhd believes that financial liabilities such as bonds should not be measured at fair value but at amortised cost. Briefly explain whether the fair value option for financial liabilities is relevant for Hande Bhd. (2 Marks)

APPENDIX Present Value Table: Present value interest factor of RM1 per period at i% for n periods, PVIF(i,n). Period 1% 2% 3% 4% 5% 6% 7% 8% 0.99010 0.98039 0.97087 0.96154 10.95238 0.94340 0.93458 0.92593 2 0.98030 0.96117 0.94260 0.92456 10.90703 0.89000 0.87344 0.85734 3 0.97059 0.94232 0.91514 0.88900 10.86384 0.83962 0.81630 0.79383 0.96098 0.92385 0.88849 0.85480 0.82270 0.79209 0.76290 0.73503 5 0.95147 0.90573 0.86261 0.82193 10.78353 0.74726 0.71299 0.68058 6 0.94205 0.88797 0.83748 0.79031 10.74622 0.70496 0.66634 0.63017 1-3 0.93272 0.87056 0.81309 0.75992 10.71068 0.66506 0.62275 0.58349 8 0.92348 0.85349 0.78941 0.73069 10.67684 0.62741 0.58201 0.54027 9 0.91434 0.83676 0.76642 0.70259 10.64461 0.59190 0.54393 0.50025 10 0.90529 0.82035 0.74409 0.67556 10.61391 0.55839 0.50835 0.46319 Present value interest factor of an (ordinary) annuity of RM1 per period at i% for n periods, PVOI(i,n). Period 1% 2% 3% 4% 5% 6% 7% 8% 1 0.99010 0.98039 0.97087 0.96154 0.95238 0.94340 | 0.93458 0.92593 2 1.97040 1.94156 1.91347 1.88609 1.85941 1.83339 1.80802 1.78326 3 2.94099 2.88388 2.82861 2.77509 2.72325 2.67301 2.62432 2.57710 4 3.90197 3.80773 3.71710 3.62990 3.54595 3.46511 3.38721 3.31213 5 4.85343 4.71346 4.57971 4.45182 4.32948 4.21236 4.10020 3.99271 6 5.79548 5.60143 5.41719 5.24214 5.07569 4.91732 4.76654 4.62288 7 6.72819 6.47199 6.23028 6.00205 5.78637 5.58238 5.38929 5.20637 8 7.65168 7.32548 7.01969 6.73274 6.46321 6.20979 5.97130 5.74664 9 8.56602 8.16224 7.78611 7.43533 7.10782 6.80169 6.51523 6.24689 10 9.47130 8.98259 8.53020 8.11090 7.72173 7.36009 7.02358 6.71008

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