On 31 December 2017 Real Estate Company issued K300, 000 of 10% bonds. The bonds are due on January 1, 2023, with interest payable each July 1 and January 1. The bonds are issued to yield 8% Interest. The accountant forgot to include this transaction in the years 2017 and 2018.

Required.

Basing on the guidelines of International Financial Reporting Standard 9, Financial Instruments explain how Real state should record the transaction in above, and prepare the journal entry for both 2017 and 2018.

ii) IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors describes the different types of errors and how they should be account for. Explain what type of error has been made by real estate by forgetting to include the issue of the bonds and the effect it will have on the financial statements for 2017