Question 3

The CEO of NUST Ltd would like your help on the following transactions:

1. On 1 July 2015 NUST Ltd purchased 100 000 N$10 debentures for N$1 000 000 from UNAM Ltd. These debentures will be redeemed in four years time at a premium of 50%. The coupon-rate quoted on the debentures is 12%, payable at 30 June each year. The market interest rate is 21 .16051%. On 30 June 2017 UNAM Ltd announced that it was experiencing cash flow problems and would not be able to pay interest in the next year but has committed to paying N$336 000 on 30 June 2019 in full and final payment. NUST Ltd acquired the debentures under a business model whose objective is to hold assets in order to collect contractual cash flows and it did not designate the above debentures as at fair value through profit or loss.

2. NUST Ltd acquired 200 8% IUM bonds (par-value of R10 000) for N$2 000 000 on 1 January 2016. NUST Ltd sold 80 of these 8% IUM bonds to Lingua Ltd on 1 April 2017 for 101%. Interest on the bonds are payable in arrears annually on 31 December. The bonds traded at 101.8% at 30 June 2017 (30 June 2016: 101.1%). NUST Ltd re-measures its investment in bonds to fair value before each disposal. Assume that any decreases in fair value are temporary. NUST Ltd designated these bonds as "at fair value through profit and loss (P/L) on initial recognition. No transaction cost was incurred on any of the above transactions.

Required: Journalise the above transactions in the accounting records of NUST Ltd for the reporting periods ended 30 June 2016, 2017 and 2018.

1. Journal narrations are required.

2. Do each instruments journals separately