QUESTION 2 January 2019. Question 41 QUESTI Lyng (b) With regard to the following financial instruments, explain clearly which should be classified as financial liabilities and which as equity instruments, together with how each should be recorded in the financial statements. (1) Cohen Limited issued 10,000 redeemable shares at par for 10,000. Redemption of the shares for cash is at the discretion of Cohen Limited. (ii) Diamond Limited issued 6000 non-redeemable shares for 6000. Diamond Limited is required to pay an annual dividend in perpetuity equal to a rate of 5% of the par value of the shares. (iii) Young Limited issued 20,000 shares for 4,000. The shares will be redeemed in three years' time when Young Limited will deliver a number of its own ordinary equity shares as are equal to the value of 500 ounces of gold. (iv) Prince ple issued 1,000,000 5% preference shares with a mandatory redemption of the shares on 31 December 2025. (v) Cooke plc issued 4,000 non-redeemable shares for 4,000. Dividend distributions are at the discretion of Cooke plc. 13 Marks