On $1$ January $20\mathrm{.}20$ Zen Ltd purchased a bond from Day Ltd for R$914530$

The maturity date is $31$ December $20\mathrm{.}23$

The following details are applicable to the bond:

Market rate $15\%$ per annum

Coupon rate $12\%$ per annum

Nominal value R$1000000$

Future value R$1000000$

Period $4$ years

Interest per annum R$120000($Payable annually in arrears on $31$ December$)$

Required

$(1)$ Prepare the amortisation table for Zen Ltd for the investment in the above bond.

$(2)$ Prepare the journal entries to account for the bond in the accounting records of Zen Ltd for period of investment.

$4\mathrm{.}2$ Zen Ltd acquired $1000$ shares in Waterloo Ltd at a price of R$15,00$ per share. The shares were acquired on $1$ July $20\mathrm{.}20$ and are held for trading. Transaction costs amounted to R$1000$ at year end, $31$ December $20\mathrm{.}20,$ the market value of one Waterloo Ltd share was R$17,00$

Required

$(1)$ Prepare journal entries to account for the above transaction costs in the records of Zen Ltd$.$

$4\mathrm{.}3$ Zen Ltd acquired $1000$ shares in Blue Ltd at a price of R$15,00$ per share.

The shares were acquired on $1$ July $20\mathrm{.}20.$ At initial recognition, Zen Ltd made the election to designate the investment in blue as measured at fair value through other comprehensive income.

Transaction costs amounted to R$1000$ at year end $31$ December $20\mathrm{.}20,$ the market value of one Blue Ltd share was R$17,00$

Required

$(1)$ Prepare journal entries to account for the above transactions in the accounting records of Zen Ltd$.$

$4\mathrm{.}4$ Zen Ltd issues $2000$ convertible debentures at $1$ January $20\mathrm{.}20.$

The debentures have a three$-$year term and are issued at face value of R$1000$ per debenture totaling R$2000000.$ Interest is payable annually in arrears on $31$ December $20\mathrm{.}22,$ each debenture is convertible into $250$ ordinary shares, or the debentures can be redeemed at face value of R$1000$ each.

The conversion into shares or cash is at the option of the debenture holder. When the debentures were issued the prevailing market interest rate for a similar debt instrument without a conversion option was $9\%$ per annum.

Required

$(1)$ Calculate the present value of liability component $($debentures including interest$).$

$(2)$ Prepare the amortisation table for Zen Ltd to account for the above convertible debentures.

$(3)$ Prepare the journal entries to account for the above transactions for the period of investment for the year ended.

Answer text Question $4$

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