Q 2 Financial Instruments Identify whether the following financial instruments should be classified by the issuer as a liability (debt) or equity in accordance with IAS 32. a) A has issued a perpetual preference share redeemable only at A's option. A dividend of 8% is paid annually provided there are sufficient distributable profits. (2 marks) b) B has issued a perpetual convertible bond. Interest of 10% on the bond is paid if a dividend is paid on the ordinary shares of B. (2 marks) Total 4 marks Q3 Financial Instruments On 1.1.XO Pen Co acquires 100,000 par value 9% bonds of Paper Co, priced to yield 10% with a maturity date of 31.12.x4. This financial asset of Pen Co is measured at amortised cost. Required: Calculate the asset value which should be initially recognised, and show how this would change every year until maturity. Note: Annuity factors nar 10% 1 0.9091 2 1.7355 3 2.4869 4 3.1699 5 3.7908 Discount factors Periods n 10% 1 0.909 2 0.826 3 0.751 4 0.683 5 0.621