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Can someone do this question please the last two Question 2 On 30 July 2015, Sainsbury's (the UK grocery retailer) issued 250 million of perpetual
Can someone do this question please the last two
Question 2 On 30 July 2015, Sainsbury's (the UK grocery retailer) issued 250 million of "perpetual subordinated capital securities. The securities are listed on a stock exchange. The key terms of the securities are: - The securities are perpetual (no fixed redemption date); - An annual coupon of 16 million is payable to the holders of the securities; At each coupon payment date, Sainsbury's has a choice between a) paying the coupon, or b) postponing the payment. Such a choice gives Sainsbury's the right to postpone coupon payments indefinitely; On 30 July 2016, Sainsbury's decided to make the annual coupon payment and paid 16 million to the investors. Required: a) Explain how these securities should be recognised on Sainsbury's statement of financial position at issuance date (30 July 2015). 6 marks b) Explain how the annual coupon should be recognised in Sainsbury's statement of financial position and statement of comprehensive income for the financial year ending 30 July 2016. 6 marks c) Investor plc owns 30 million worth of Sainsbury's perpetual securities. Explain how these securities should be recognised in Investor plc's statement of financial position. 8 marks (Total - 20 marks) Question 2 On 30 July 2015, Sainsbury's (the UK grocery retailer) issued 250 million of "perpetual subordinated capital securities. The securities are listed on a stock exchange. The key terms of the securities are: - The securities are perpetual (no fixed redemption date); - An annual coupon of 16 million is payable to the holders of the securities; At each coupon payment date, Sainsbury's has a choice between a) paying the coupon, or b) postponing the payment. Such a choice gives Sainsbury's the right to postpone coupon payments indefinitely; On 30 July 2016, Sainsbury's decided to make the annual coupon payment and paid 16 million to the investors. Required: a) Explain how these securities should be recognised on Sainsbury's statement of financial position at issuance date (30 July 2015). 6 marks b) Explain how the annual coupon should be recognised in Sainsbury's statement of financial position and statement of comprehensive income for the financial year ending 30 July 2016. 6 marks c) Investor plc owns 30 million worth of Sainsbury's perpetual securities. Explain how these securities should be recognised in Investor plc's statement of financial position. 8 marks (Total - 20 marks)Step by Step Solution
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