Investment in debentures

On 1 July 2019, Magic Ltd purchased all 15 000 issued 12% debentures in Thunder Ltd with a par value of R500 each, at their fair value of R450 each. The coupon interest on the debentures is payable on 30 June each year. The debentures are mandatorily redeemable on 30 June 2024 at face value.

On 1 July 2019, Magic Ltd paid transaction costs amounting to R100 000 associated with the debenture issue.

Investment in shares

On 1 September 2019, Magic Ltd acquired 60 000 ordinary shares in Cat Ltd at a price of R20 per share. On the same date, Magic Ltd paid a commission of R0.30 per share.

On 1 September 2019, Magic Ltd irrevocably elected to measure the investment in the shares of Cat Ltd at fair value through other comprehensive income in terms of IFRS 9, Financial Instruments in its separate accounting records.

On 30 April 2020, when the fair value per share was R22.50, Cat Ltd declared and paid a dividend of R1.80 per share to all ordinary shareholders. On 30 June 2020, the fair value per share of Cat Ltd was R23.75.

REQUIRED:

	Marks
(b) Prepare all the journal entries required to account for the issue of the debentures in the accounting records of Thunder Ltd, for the financial year ended 30 June 2020.	9
(c) Prepare all the journal entries relating to investment in Cat Ltd in the separate accounting records of Magic Ltd, for the financial year ended 30 June 2020. Show all journal dates.	9
TOTAL	[18]
Please note: Your answer must comply with the requirements of International Financial Reporting Standards (IFRS). Ignore income tax and value added tax (VAT). Round all amounts to the nearest rand.