QUESTION 2 a) b) c) (22 MARKS) Differentiate between redeemable preference shares and irredeemable preference shares and state how each type should be accounted for in the financial statements of a company. (4 marks) Define compound financial instruments and explain how they should be accounted for in the financial statements of any entity according to the relevant IFRS. (6 marks) Clarendon Enterprise Limited (CEL) issued $12,000,000 convertible debentures at January 1, 2019. The debentures have a four-year term, and interest is payable annually in arrears at a nominal annual interest rate of 10% percent. When the debentures were issued, the prevailing market interest rate for similar debt without conversion options was 14%. The following discount rates are available: PVIFA 10% PVIFA 14% End of year Year 1 0.9091 0.8772 Year 2 0.8264 0.7695 Year 3 0.7513 0.6750 year 4 0.6830 0.5921 Required: In relation to the convertible debentures disclosed above, prepare extracts of the entity's statement of profit or loss and statement of financial position for the year ended December 31, 2012. (Show all workings.) (12 marks)