1. Briefly explain the meaning of financial instrument.
2. Briefly explain the meaning of financial assets and financial liability by giving three examples of each type.
3. Briefly explain when a company should derecognize financial asset and financial liability from their financial statements
4. Compare FOUR (4) difference of an equity instruments are held at FVTPL and FVTOCI.
5. Beeta Bhd issues 3,000 convertible bonds at par value of RM1,000, 8% per bond at 1.1.2019. The bonds have four-year term. Interest is payable annually. When the bonds are issued, the prevailing market rate for similar debt without conversion options is 10%

Required:

What is the value of the equity and liability component in the bond?

6. An 8% RM30,000,000 convertible loan note was issued on 1 April 2019 at par. Interest is payable in arrears on 31 March each year. The loan note is redeemable at par on 31 March 2022 or convertible into equity shares at the option of the loan note holders on the basis of 30 shares for each RM100 of loan. A similar instrument without the conversion option would have an interest rate of 10% p.a.

The present value of RM1 receivable at the end of each year based on discount rates of 8% and 10% are:

		8%	10%
End of year	1	0.93	0.91
	2	0.86	0.83
	3	0.79	0.75

1. Cheetah Bhd had incurred a transaction cost of RM9,000 to purchase 40,000 RM1 listed equity shares at RM2 per share on 1 June 2019. The company had received dividend RM0.40 per share on 30 November 2019. These shares were traded at RM7.50 at the year ended 31 December 2019.

Required:

Prepare the financial statement (extracts) at 31 December 2019 relating to this investment on the basis that:

1. The shares were bought for trading purposes
2. The shares were bought as a source of dividend income and were the subject of an irrevocable election at initial recognition.

Required:

What amount will be credited to equity on 1 April 2019 in respect of this financial

Answer rating: 100% (QA)

Briefly explain the meaning of financial instrument A financial instrument is a contract between two parties that specifies certain financial obligations between them The most common types of financia... View the full answer