Question 3: On 1 June 2022 Sydney Led enters into a firm commitment with SanFran Co. to buy US$1 000 000 of inventory. The inventory will be transferred to Sydney Lid (making Sydney Led therefore liable for the debt) on 1 August 2022, and payment will be made on that date. The financial year end of Sydney Lid is 30 June. We will assume that the hedging arrangements used by Sydney Lid qualify for 'hedge accounting' pursuant to AASB 9 and that Sydney Led has designated the hedging arrangement as a 'fair value hedge'. The relevant spot rates and forward rates are as follows: Date Spot rate Forward rate 1 June 2022 US$1.00 = A$1.35 US$1.00 = A$1.40 30 June 2022 US$1.00 = A$1.27 US$1.00 = A$1.42 1 August 2022 US$1.00 = A$1.43 US$1.00 = A$1.43 Provide the journal entries to account for the hedged item and hedging instrument as required on 1 June 2022, 30 June 2022 and 1 August 2022. Question 4: On 1 July 2022 Midget Led acquired some corporate bonds issued by Farrelly Lid. These bonds cost $2 277 220 and had a life of four years. They had a 'face value' of $2 million and offered a coupon rate of 10 per cent paid annually ($200 000 per year, paid on 30 June). The bonds would repay the principal of $2 million on 30 June 2026. At the time, the market required a rate of return on 6 per cent on such bonds. Midget Led operates within a business model where government bonds are held in order to collect contractual cash flows and there is no intention to trade them. Assume that there were no direct costs associated with acquiring the bonds. (a) Explain why the company was prepared to pay $2 277 220 for the bonds given that, apart from the interest, they expect to receive only $2 million back in four years. (b) Determine whether Midget Lid can measure the government bonds at amortised cost. (c) Calculate the amortised cost of the bonds as at 30 June 2023, 2024, 2025 and 2026. (d) Provide the accounting journal entries for the years ending 30 June 2023, 2024, 2025 and 2026