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(b) On 31 December 20x1, K Bhd issues 100 million redeemable preference shares at an issue price of 95 cents per share. Transaction cost amount

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(b) On 31 December 20x1, K Bhd issues 100 million redeemable preference shares at an issue price of 95 cents per share. Transaction cost amount to 1 million and paid in cash. The preference shares carry a mandatory fixed dividend of five cents per share payable at the end of each year and are redeemable at RM1 per share on 31 December 20x6 Required: Explain the classification of the preference share and the subsequent measurement (assume the effective interest rate is 6.4415%) (10 marks]

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