PART B Broadfield Limited purchased 5% debentures in X Limited on 1 January 20X3 (their issue date) for N$ 100 000. The term of the debentures was 5 years and the maturity value is N$ 130 525. The effective interest on the debentures is 10% and the company has classified them as held to maturity financial asset.

At the end of 20X4 X Limited went into liquidation. All interest had been paid until that date. On 31 December 20X4 the liquidator of X Limited announce that no further interest would be paid and only 80% of the maturity value would be repaid, on the original repayment date. The market interest rate on similar bonds is 8% on that date.

Required (a) What value should the debentures have been stated at just before the impairment became apparent? ( 7 marks) (b) At what value should the debentures be stated as 31 December 20X4 after the impairment? (1 mark) (c) How will the impairment be reported in the financial statements for the year ended 31 December 20X4 (2 marks)