a) Differentiate between redeemable preference shares and irredeemable preference shares and state how each type should be accounted for in the financial statements of a company. (4 marks) b) Define compound financial instruments and explain how they should be accounted for in the financial statements of any entity according to the relevant IASIFRS. (6 marks) c) Portmore Enterprise Limited (PEL.) issued $9.000.000 coevertible debentures at January 1. 2019. The debentures have a four-year term, and interest is payable annually in arrears at a nocninal annual interest rate of 10% pereent. At the date the debentures were issued, the prevailing market interest rate for similar debt without conversion options was 14% The following disenunt rates are available: Required: Prepare extracts of the catity's statement of profit or loss and statement of financial position for the year ended December 31, 2019, based on the above issue of convertible debentures. (Show all workings.) (12 marks) QUESTION 3 20. MARKS PART A The following information relates to Micron Traders Limited (MTL). During early February2020 and before the financial statements for the year ended 31 December 2020 had been approved by the board, the following events occurred: A) A large debeor of MTL's goes bankirupt and the company is expected to lose 53.2 millien. B) MTL. Limited had provided \$2.6 millson at 31 December 2020 to cover pessible damages for a case pending in cotirt, however the matter was unexpectedly settiled in its favour. C) MTL's' warchouse was destreyed by fire and half of the inventory on site at 31 December 2020, valued at $3.8 million, was destroyed. REQUIRED: Define Events After the Balance Sheet Date as per LASI0 and explain hew each of the abeve events sheuld be treated in the financial statements as at 31 December 2020 in accordance with LAS 10. (12 marks) PART B The directors of Clarendon Einterprise Limited (CEL)are uncertain of the difference between a provision and a contingent liability. Write a brief explanation explaining both concepts to give them clarity. a) Differentiate between redeemable preference shares and irredeemable preference shares and state how each type should be accounted for in the financial statements of a company. (4 marks) b) Define compound financial instruments and explain how they should be accounted for in the financial statements of any entity according to the relevant IASIFRS. (6 marks) c) Portmore Enterprise Limited (PEL.) issued $9.000.000 coevertible debentures at January 1. 2019. The debentures have a four-year term, and interest is payable annually in arrears at a nocninal annual interest rate of 10% pereent. At the date the debentures were issued, the prevailing market interest rate for similar debt without conversion options was 14% The following disenunt rates are available: Required: Prepare extracts of the catity's statement of profit or loss and statement of financial position for the year ended December 31, 2019, based on the above issue of convertible debentures. (Show all workings.) (12 marks) QUESTION 3 20. MARKS PART A The following information relates to Micron Traders Limited (MTL). During early February2020 and before the financial statements for the year ended 31 December 2020 had been approved by the board, the following events occurred: A) A large debeor of MTL's goes bankirupt and the company is expected to lose 53.2 millien. B) MTL. Limited had provided \$2.6 millson at 31 December 2020 to cover pessible damages for a case pending in cotirt, however the matter was unexpectedly settiled in its favour. C) MTL's' warchouse was destreyed by fire and half of the inventory on site at 31 December 2020, valued at $3.8 million, was destroyed. REQUIRED: Define Events After the Balance Sheet Date as per LASI0 and explain hew each of the abeve events sheuld be treated in the financial statements as at 31 December 2020 in accordance with LAS 10. (12 marks) PART B The directors of Clarendon Einterprise Limited (CEL)are uncertain of the difference between a provision and a contingent liability. Write a brief explanation explaining both concepts to give them clarity
