QUESTION 2 (35 marks) Platinova Ltd is a large entity that mines precious metals and has a 31 December year- end. The directors of Platinova Ltd recently discovered new land that they want to purchase for exploration purposes as they believe that there could be a rich source of platinum within that land. To finance the purchase of the land, Platinova Ltd issued a number of financial instruments during the financial year ending 31 December 2021. Details of the issues are as follows: Preference shares On 1 January 2021, Platinova Ltd issued 1 000 000 non-redeemable preference shares of R10 each. Platinova Ltd is not obliged to make payments in the form of interest or dividends on these preference shares and thus decided to retain money in the entity by not paying any interest nor dividends on these preference shares during the financial year. Debentures On 1 January 2021, Platinova Ltd issued 1 000 000, 5% convertible debentures at a face (nominal) value of R20 each. Interest is payable annually on 31 December. No transaction costs were incurred when the debentures were issued. The market rate of interest on similar debt is 10%. Redemption at face (nominal) value shall take place on 31 December 2025. Bond On 1 July 2021, Platinova Ltd issued a bond with a face value of R50 000 000. The bond is redeemable in three years' time at the face value and carries a coupon rate of 8% payable annually in arrears on 30 June. 63 ANNEXURE F: FORMATIVE ASSESSMENT 1 HFAC232-1-Jul-Dec2022-FA1-SK-V2-15032022 REQUIRED: 2.1) Differentiate between a financial liability and equity in accordance with IAS 32. (7 marks) 2.2) Prepare the general journal entries required in the records of Platinova Ltd to account, separately, for each of the three financial instruments issued during the financial year as well as any finance costs incurred in respect of the financial instruments, for the year ended 31 December 2021. Dates are required. Narrations are not required. Show all workings clearly. Ignore VAT and Income tax. (28 marks)