A strategic investor, Merak Indah Bhd, invests in 10 million equity shares of a listed company, Merpati Putih Construction Bhd on 01 July 2019. The price per share is RM 1 and incurred legal charges of 2% of the value of the investment. Merak Indah Bhd made a binding election immediately after purchase to take all re-measurement gains and losses through other comprehensive income as allowed by MFRS 9 “Financial Instruments”. Share prices during the period are as follows:

31 December 2019 RM 1.40

31 December 2020 RM 1.20

Merpati Putih Bhd paid RM 0.20 per share as dividend for the year ended 2019 and 2020. The shares were sold on 31 December 2021 at RM 1.30 per share.

Required:

1. In the books of MERAK INDAH:
2. Prepare journal entries to give effect to the above transactions for year 2019, 2020, 2021.

2. Prepare extracts of Statement of Profit and Loss for year 2019, 2020 and 2021

3. Prepare extract of Statement of Financial Position for year 2019, 2020, 2021.

2. Discuss TWO (2) main criticisms of accounting for financial instruments that emerged during the financial crisis.