a) Define compound financial instruments and explain how they should be accounted for in the financial statements of an entity according to the relevant IFRS. (4 marks) b) Hancock Enterprise Limited (HEL) issued $6,000,000 convertible debentures at January 1 , 2019. The debentures have a four-year term, and interest is payable annually in arrears at a nominal annual interest rate of 10% percent. When the debentures were issued, the prevailing market interest rate for similar debt without conversion options was 14%. The following discount rates are available: Required: In relation to the convertible debentures disclosed above, prepare extracts of the entity's statement of profit or loss and statement of financial position for the year ended December 31, 2019. (Show all workings.) (12 marks) According to the IASB's Conceptual Framework: "The objective of general-purpose financia reporting is to provide financial information about the entity that is useful to investors, lenders an other creditors in making decisions about providing resources to the entity". John Monroe has just started a micro-finance company in Jamaica and is now finalizing the procedures for granting loans to prospective firms. He has been told by his young accountant that he should request at least three years' financial statements from all potential clients in order to assess their credit worthiness. REQUIRED: Write a memo to John Monroe explaining the critical financial information that can be gained from the general-purpose financial statements provided by his potential clients to assist in the granting of credit. (8 marks)