QUESTION $3$

Jogger $($Pty$)$ Ltd is a company with a $31$ December financial year$-$end. In recent years,

the company has been doing exceptionally well, and they have excess cash that they

are looking to invest to further grow their resources.

The board of directors has therefore approved the following investment transactions

during the $2024$ financial year.

Transaction $1$

On $15$ March $2024,$ Jogger $($Pty$)$ Ltd purchased $10000$ ordinary shares on the JSE

Ltd for an amount of R$112$ per share. This was also the fair value at the acquisition

date. The related transaction costs amounted to R$11200.$ The fair value of the $10000$

shares was R$115$ per share on $31$ December $2023.$ All amounts were paid for in cash.

Jogger $($Pty$)$ Ltd is planning on holding these shares as a long$-$term investment and,

therefore, irrevocably chose to recognise the gains and losses resulting from the fair

value adjustments on these shares in other comprehensive income.

Transaction $2$

On $1$ January $2024,$ Jogger $($Pty$)$ Ltd purchased $10125$ listed debentures at a price of

R$105$ per debenture. The debentures are $11\%$ R$120$ debentures and are redeemable

at par value on $31$ December $2027.$

Transaction costs amounted to R$2500.$ Interest is payable annually on $31$ December.

The purchase price is equal to the fair value at the transaction date. The debentures

are held within a business model with the objective to collect contractual cash flows

that are solely payments of principal and interest on the principal outstanding at spec

ified dates.

$65$

HFAC$232-1-$Jul$-$Dec$2024-$FA$1-$CP$-$V$2-03072024$

ANNEXURE F: FORMATIVE ASSESSMENT $1$

REQUIRED:

$3\mathrm{.}1$

$3\mathrm{.}2$

Prepare ALL the journal entries relating to Transaction $1$ in the records of Jog

ger $($Pty$)$ Ltd for the year ended $31$ December $2024.$

$$ Journal dates and narrations are not required.

$$ Show all calculations.

$(8$ marks$)$

With reference to the requirements of IFRS $9$ Financial instruments, briefly

explain how your answer in $3\mathrm{.}1$ would differ if Jogger $($Pty$)$ Ltd did not

irrevocably choose to recognise the gains and losses resulting from the fair

value adjustments on these shares in other comprehensive income.

$(5$ marks$)$

$3\mathrm{.}3$

Prepare ALL the journal entries relating to Transaction $2$ in the records of Jog

ger $($Pty$)$ Ltd for the year ended $31$ December $2024.$

$$ Journal dates and narrations are not required.

$$ Show all calculations.