SCHGs opening balance of financial assets, measured at fair value through profit or loss, has carrying amount of $12 5 million These financial assets are held in a fund whose value changes directly in proportion to a specified market index On 1 January 2019 the relevant index was 1,500 and on 31 December 2019, it was 1,944 On 1 January 2019, SCHG issued four years bonds with a total face value of $ 271,300 The coupon interest rate was 10 per annum The prevailing market interest rate was 12 per annum so the bonds were issued at $ 258,288 SCHG issues a bond for $503,778 on 1 January 2019 No interest is payable on the bond, but it will be held to maturity and redeemed on 31 December 2021 for $600,000 The bond has not been designated as at fair value through profit or loss The effective interest rate is 6 Required What amount of gain or loss should be recognised at 31 December 2019 in respect of the financial assets In respect of the bond issues, what are the instalment payments, interest payments and year end balances for the two years ended 31 December 2019 and 31 December 2020 For the financial assets and liabilities above, calculate the total charges to the income statement of SCHG for the year ended 31 December 2019 and the balances outstanding at 31 December 2019

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 11, 2024

SCHGs opening balance of financial assets, measured at fair value through profit or loss, has carrying amount of $12.5 million. These financial assets are held

SCHGs opening balance of financial assets, measured at fair value through profit or loss, has carrying amount of $12.5 million. These financial assets are held in a fund whose value changes directly in proportion to a specified market index. On 1 January 2019 the relevant index was 1,500 and on 31 December 2019, it was 1,944.

On 1 January 2019, SCHG issued four years bonds with a total face value of $ 271,300. The coupon interest rate was 10% per annum. The prevailing market interest rate was 12% per annum so the bonds were issued at $ 258,288.

SCHG issues a bond for $503,778 on 1 January 2019. No interest is payable on the bond, but it will be held to maturity and redeemed on 31 December 2021 for $600,000. The bond has not been designated as at fair value through profit or loss. The effective interest rate is 6%.

Required:

What amount of gain or loss should be recognised at 31 December 2019 in respect of the financial assets?
In respect of the bond issues, what are the instalment payments, interest payments and year-end balances for the two years ended; 31 December 2019 and 31 December 2020.

For the financial assets and liabilities above, calculate the total charges to the income statement of SCHG for the year ended 31 December 2019 and the balances outstanding at 31 December 2019.