Question LTD-001 Fima Limited issued 1000, 5% secured debentures of R1000 face value at 96% on...

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Question LTD-001 Fima Limited issued 1000, 5% secured debentures of R1000 face value at 96% on 1 January 2017. On that date, the finance director determined effective interest rate to be 5, 95807% The terms of issue include the following provisions: i. 200 of 5% secured debentures are to be redeemed at face value at the end of each year starting on 31 December 2019. ii. Interest is payable on 31 December of each year. iii. The company is empowered to purchase debentures on the open market at any time and cancel them. If it does so, the debentures to be redeemed at the end of the year in which they are purchased are to be reduced by the nominal value of the debentures purchased. You are informed that, on 30 June 2019, the company purchased 150 of 5% secured debentures at 98%. You are required to: Date (a) Complete the debenture amortisation table in the following format. Interest paid at Effective 5% interest at 5 95807% Discount on Balance on discount on amortised issue Carrying amount of 5% Debentures 1 January 2017 31December 2017 31 December 2018 31December 2019 31 December 2020 31December 2021 31December 2022 31 December 2023 [15 marks] (b) Record all the relevant transactions, including cash transactions and including interest transactions, in the General Journal of the company for the years ended 31 December 2017, 2018 and 2019. [40 marks] (c) Explain why the company would wish to agree to buy back its own debentures on the securities exchange. [5 Mark] Question LTD-001 Fima Limited issued 1000, 5% secured debentures of R1000 face value at 96% on 1 January 2017. On that date, the finance director determined effective interest rate to be 5, 95807% The terms of issue include the following provisions: i. 200 of 5% secured debentures are to be redeemed at face value at the end of each year starting on 31 December 2019. ii. Interest is payable on 31 December of each year. iii. The company is empowered to purchase debentures on the open market at any time and cancel them. If it does so, the debentures to be redeemed at the end of the year in which they are purchased are to be reduced by the nominal value of the debentures purchased. You are informed that, on 30 June 2019, the company purchased 150 of 5% secured debentures at 98%. You are required to: Date (a) Complete the debenture amortisation table in the following format. Interest paid at Effective 5% interest at 5 95807% Discount on Balance on discount on amortised issue Carrying amount of 5% Debentures 1 January 2017 31December 2017 31 December 2018 31December 2019 31 December 2020 31December 2021 31December 2022 31 December 2023 [15 marks] (b) Record all the relevant transactions, including cash transactions and including interest transactions, in the General Journal of the company for the years ended 31 December 2017, 2018 and 2019. [40 marks] (c) Explain why the company would wish to agree to buy back its own debentures on the securities exchange. [5 Mark]