1. a) Explain with reference to IFRS 9 and any relevant standards (where applicable) Pandan Bhd leased a 20 storey building for 10 years from Antigona Ltd, an Australian company. The lease payments are denominated in Australian dollar. The functional currency of Pandan Bhd is Ringgit Malaysia and the functional currency of Antigona Ltd is Australian dollar. Adrian, a financial controller of Pandan Bhd is a very smart accountant and he always does his best to minimize the losses of the company. Explain whether or not an embedded derivative exists in the above case. If exist, explain how the embedded derivative should be treated in the account. b) Note* MFRS 121 = IAS 21 Damai Bhd is a company incorporated in Malaysia with 31 December accounting year end, and its functional currency is Ringgit Malaysia (RM). On 10 November 2014, Damai Bhd purchased bonds issued by Sentosa PLC, a Singapore company at its par value of S$100,000, in which it will hold until the maturity date. It classifies the investment in bonds as held to maturity' security and applies the amortised method under MFRS139. The exchange rates on 10 November 2014 and 31 December 2014 are S$1.00=RM2.30 and S$1.00=2.10 respectively. Explain the accounting treatment for the above transaction as required under MFR$121- The Effects of Changes in Foreign Exchange Rates. 1. a) Explain with reference to IFRS 9 and any relevant standards (where applicable) Pandan Bhd leased a 20 storey building for 10 years from Antigona Ltd, an Australian company. The lease payments are denominated in Australian dollar. The functional currency of Pandan Bhd is Ringgit Malaysia and the functional currency of Antigona Ltd is Australian dollar. Adrian, a financial controller of Pandan Bhd is a very smart accountant and he always does his best to minimize the losses of the company. Explain whether or not an embedded derivative exists in the above case. If exist, explain how the embedded derivative should be treated in the account. b) Note* MFRS 121 = IAS 21 Damai Bhd is a company incorporated in Malaysia with 31 December accounting year end, and its functional currency is Ringgit Malaysia (RM). On 10 November 2014, Damai Bhd purchased bonds issued by Sentosa PLC, a Singapore company at its par value of S$100,000, in which it will hold until the maturity date. It classifies the investment in bonds as held to maturity' security and applies the amortised method under MFRS139. The exchange rates on 10 November 2014 and 31 December 2014 are S$1.00=RM2.30 and S$1.00=2.10 respectively. Explain the accounting treatment for the above transaction as required under MFR$121- The Effects of Changes in Foreign Exchange Rates
