1. Kensington Enterprise bought one hundred thousand ten year $1,000 par value bonds. The bonds pay interest of semi-annually at a rate of 6.5% per annum. The entitys aim is to hold these and similar financial instruments to their maturity date in order to collect the designated principal and interest amounts.The entity also bought a 25% stake in a company listed on the Jamaican Stock Exchange (JSE). Each stock was bought at a 10% premium when the average market price stood at $52. The entity has no plans to sell these in the near future.

Required:

a. How should Kensington classify the bonds subsequent to initial recognition?

b. Is there an alternative to the above classification made by the entity?

c. What if management actually had intention of selling the bonds before the maturity date

but wanted to hold them for a while first to collect some cash flows?

d. On the part of the issuer of the bonds, how should the instruments be carried subsequent

to initial recognition?

e. How should Kensington carry the equity instruments? Are there any special steps which

must be taken at the point of initial recognition?

f. How will value changes on the equity instrument be treated in accordance with IFRS 9?