Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

QUESTION TWO (20 MARKS) a) Google Inc seeks to raise finances in order to expand their operations. The company is issuing corporate bonds with a

image text in transcribed

QUESTION TWO (20 MARKS) a) Google Inc seeks to raise finances in order to expand their operations. The company is issuing corporate bonds with a nominal value of Ksh 200 million on 19 Jan 2021, the coupon rate is 12% The bonds are repayable on 31 December 2026 at a premium of 5%. The total issue cost amount to Ksh 20 million, the bond was issued at a discount of 7%. Required: a) Compute the issue price/bond value and the proceeds on issue of the bonds (2 marks) b) Compute the effective rate of interest (6 marks) c) Prepare the amortization schedule (4 marks) b) Golden Treasures Retirement Benefit Scheme is a defined benefit scheme that has been operating for the last 30 years. The General Manager cannot understand why the accountants have been charging a constant pension cost in the financial statement different from the amounts of actual contributions made during the period. The fund accountant has explained to him that this is as a result of the difference between funding and accounting for pension schemes in periods of pension scheme surpluses or deficits arising from variations in regular costs that are caused by factors such as experience adjustments and effects of changes in actuarial assumptions. Required: (a). With reference to IAS 19 (Employee Benefits), revised, define the following terms: (i). Experience adjustments (2 marks) (ii). Accrued benefit valuation methods. (2 marks) (iii). Current service cost (2 marks) (iv). Vested employee benefits (2 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Morse Hartgraves

8th Edition

1618532359, 9781618532350

More Books

Students also viewed these Accounting questions

Question

What is CRM and how do you know if it is successful?

Answered: 1 week ago

Question

What would you do?

Answered: 1 week ago