On 1 January 2013, Vertigo Limited issued 30,000,000 1 preference shares at par, incurring issue costs of
Question:
On 1 January 2013, Vertigo Limited issued 30,000,000 €1 preference shares at par, incurring issue costs of €300,000. The dividend payable on the preference shares was 4% per annum, payable on 31 December each year. The redemption date for the preference shares was 31 December 2017 at a price of €1.35 per share. The effective interest cost of the preference shares is 10%. The statement of financial position of Vertigo Limited on 30 December 2017, the day prior to the redemption of the preferences shares, was as follows:
Requirement
(a) Calculate the finance cost in respect of the preference shares for each of the five years ended 31 December 2013 to 2017.
(b) Assuming the redemption occurred, prepare the capital and reserves section of the statement of financial position of the Vertigo Group as at 31 December 2017.
Step by Step Answer:
International Financial Accounting And Reporting
ISBN: 9781912350025
6th Edition
Authors: Ciaran Connolly