Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

a) Tourmaline Bhd purchased debentures for its fair value of RM2,100,000 in 1 January 2020. The debentures are due to mature on 31 December 2024.

image text in transcribed
image text in transcribed
a) Tourmaline Bhd purchased debentures for its fair value of RM2,100,000 in 1 January 2020. The debentures are due to mature on 31 December 2024. The principal amount of the debentures is RM2,625,000. The fixed interest of the debentures is 5.32% that is paid annually whereas, the effective rate of interest is 8%. Required: i. Calculate the amount of interest received in 2020 and 2021. ii. Determine the amortised cost at the end of 2020,2021 and 2022. b) On 1 January 2021, Zircon Bhd issued 5% loan notes with a nominal value of RM560,000. Zircon Bhd issued the loan notes at a 4% discount and the company incurred the issued costs amounting to RM4,760. The loan notes will be repayable at a premium of 9% after four years. The effective interest rate is 10%. Required: i. Calculate the finance costs for 2021 and 2022. ii. Determine the amount of 5% loan note as at 31 December 2021 and 2022. c) On 1 January 2022, Peridot Bhd issued 10,000 5% convertible bonds at their par value of RM50 each. The bonds will be redeemed on 1 January 2027. Each bond is convertible to equity shares at the option of the holder at any time during the five-year period. Interest on the bond will be paid annually in arrears. The prevailing market interest rate for similar debt without conversion options at the date of issue was 6%. The discount factor for 6% at year 5 is 0.747. The cumulative discount factor for years 1-5 at 6% is 4.212. Required At what value should the equity element of the hybrid financial instrument be recognised in the financial statements of Peridot Bhd at the date of issue

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISO 9000 Family Of Standards With Extracts From ISO 9001 Audit Trail

Authors: David John Seear

1st Edition

1477226400, 978-1477226407

More Books

Students also viewed these Accounting questions

Question

Is SHRD compatible with individual career aspirations

Answered: 1 week ago