Bob Ltd has entered into the following transactions during the year ended 31 December 20X6:

On 1 January 20X6 Bob Ltd issued a $4 million 3% convertible loan at par, with interest payable annually in arrears. The rate for a similar loan with no conversion option is 6%. The loan is repayable in full after four years on 31 December 20X9, or may be converted to equity on the basis of 70 shares per $100 of loan.

On 15 December 20X6 Bob Ltd purchased 100,000 shares in Cob Ltd (representing a 2% shareholding), for $4.50 per share, incurring transaction fees of $15,000. These shares are held for trading purposes. As at 31 December 20X6, the shares are trading at $5 each.

On 1 October 20X6 Bob Ltd purchased 90,000 shares in Fred Ltd (representing a 6% shareholding), for $7 per share, incurring transaction costs of $20,000.

The present value of $1 payable at the end of the year, based on rates of 3% and 6% is as follows:

6%

0.94

0.89

0.84

0.79

he same purchas

accounting, but d

re stated at depr

e of inventory (c

d for, as these ar

e recoverable a

22

21

3%

0.94

0.92

A Cash

3

1 0.97