QUESTION ONE On February 1, 20X2, Flamingo Financial Incorporated (Flamingo) purchased Nighthawk Corporation (Nighthawk) 12% bonds, with par value of $200,000. at 106.5 plus accrued interest to yield 10%, Interest on the Nighthawk bonds is payable April 1 and October 1 On October 15, 20X2, Flamingo purchased 3,000 of the 100,000 common shares of Pelican Limited (Pelican) at $50 per share plus a 4% brokerage fee Flamingo, Nighthawk and Pelican are public companies with shares actively trading on the TSX For financial reporting puiposes, Flamingo's management decided to opt for early adoption of IFRS 9: Financial Instruments three years ago. Required: Describe possible scenarios, if any, and the conditions that need to be satisfied to justify and support the following accounting treatment (i) Flamingo accounting for its investment in the Nighthawk bonds as "a financial asset measured (ii) Flamingo accounting for its investment in the Nighthawk bonds as "a financial asset measured (iii) Flamingo accounting for its investment in the Nighthawk bonds as "a financial asset measured (iv) Flamingo accounting for its investment in the Pelican shares as "a financial asset measured at (v) Flamingo accounting for its investment in the Pelican shares as "a financial asset measured at (vi) Flamingo accounting for its investment in the Pelican shares as "a financial asset measured at at amortised cost" at fair value through profit and loss". at fair value through other comprehensive income" amortised cost". fair value through profit and loss". fair value through other comprehensive income". QUESTION ONE On February 1, 20X2, Flamingo Financial Incorporated (Flamingo) purchased Nighthawk Corporation (Nighthawk) 12% bonds, with par value of $200,000. at 106.5 plus accrued interest to yield 10%, Interest on the Nighthawk bonds is payable April 1 and October 1 On October 15, 20X2, Flamingo purchased 3,000 of the 100,000 common shares of Pelican Limited (Pelican) at $50 per share plus a 4% brokerage fee Flamingo, Nighthawk and Pelican are public companies with shares actively trading on the TSX For financial reporting puiposes, Flamingo's management decided to opt for early adoption of IFRS 9: Financial Instruments three years ago. Required: Describe possible scenarios, if any, and the conditions that need to be satisfied to justify and support the following accounting treatment (i) Flamingo accounting for its investment in the Nighthawk bonds as "a financial asset measured (ii) Flamingo accounting for its investment in the Nighthawk bonds as "a financial asset measured (iii) Flamingo accounting for its investment in the Nighthawk bonds as "a financial asset measured (iv) Flamingo accounting for its investment in the Pelican shares as "a financial asset measured at (v) Flamingo accounting for its investment in the Pelican shares as "a financial asset measured at (vi) Flamingo accounting for its investment in the Pelican shares as "a financial asset measured at at amortised cost" at fair value through profit and loss". at fair value through other comprehensive income" amortised cost". fair value through profit and loss". fair value through other comprehensive income
