The document discusses accounting for different types of financial assets:
- Shares purchased by a company are accounted for based on their fair value at the end of the reporting period, with any gains or losses recognized in profit or loss.
- Bonds held long-term until maturity are accounted for at amortized cost using the effective interest method.
- Unquoted long-term investments are accounted for at fair value through other comprehensive income.
- Investments intended for resale are accounted for as trading securities at fair value through profit or loss.
The document discusses accounting for different types of financial assets:
- Shares purchased by a company are accounted for based on their fair value at the end of the reporting period, with any gains or losses recognized in profit or loss.
- Bonds held long-term until maturity are accounted for at amortized cost using the effective interest method.
- Unquoted long-term investments are accounted for at fair value through other comprehensive income.
- Investments intended for resale are accounted for as trading securities at fair value through profit or loss.
The document discusses accounting for different types of financial assets:
- Shares purchased by a company are accounted for based on their fair value at the end of the reporting period, with any gains or losses recognized in profit or loss.
- Bonds held long-term until maturity are accounted for at amortized cost using the effective interest method.
- Unquoted long-term investments are accounted for at fair value through other comprehensive income.
- Investments intended for resale are accounted for as trading securities at fair value through profit or loss.
The document discusses accounting for different types of financial assets:
- Shares purchased by a company are accounted for based on their fair value at the end of the reporting period, with any gains or losses recognized in profit or loss.
- Bonds held long-term until maturity are accounted for at amortized cost using the effective interest method.
- Unquoted long-term investments are accounted for at fair value through other comprehensive income.
- Investments intended for resale are accounted for as trading securities at fair value through profit or loss.
All questions are coulsory. The exam will contain both
computational and discursive elements. Section A: 15 objectiv test questions of 2 marks each. Section B: 3 case style questions. Section C: two 20 mark constructed response questions FROM PART C&D. The section A questions and the questions in section B can cover any areas of the syllabus. Total 100 marks Leasing Indicators of being principal Example ABC Ltd has the following financial assets during the financial year. 1. ABC Ltd 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. 2. ABC Ltd bought 200,000 shares in a listed entity on 1 March 2015 for $500,000, incurring transaction costs of $40,000. ABC Ltd acquired the shares as part of a long term strategy to realise the gains in the future. The fair value of the shares was $620,000 at 31 December. The shares were subsequently sold for $650,000 on 31 January 2016. 3. ABC Ltd bought 10,000 debentures at a 2% discount on the par value of $100. The debentures are redeemable in four years’ time at a premium of 5%. The coupon rate attached to the debentures is 4%. The effective rate of interest on the debenture is 5.73%. Explain how each of the above financial assets will be accounted for in the financial statements. Example 2. Steve buys a 50 $100 redeemable 6% bond which will mature in five years time. Steve intends to keep the bond until maturity. The bond cost $4,670 and the effective rate of interest at the time was 7.65%. Required: How should this be accounted for? 3. Jamie purchased a quoted investment in a company in June 2014 with no maturity date but that he intends to keep for the long term. The investment cost $50m. At the year end 31 December 2014 the value had increased to $80m. Required: How should this be accounted for? 4. Robbie purchased shares in a company for $20m in November 2014. He intends to sell it in January 2016. At the year end 31 December 2014 the asset had a market value of $60m. Required: How should this be accounted for?