a) Mighty Zeus Ltd purchases 100,000 shares in Fletcher Building at a price of $3.75 each on

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Question:

a) Mighty Zeus Ltd purchases 100,000 shares in Fletcher Building at a price of $3.75 each on 20 April 2020. The brokerage fee was $29. On 30 June 2020 the closing price for the share in Fletcher Building was $4.40. Mighty Zeus Ltd measures its investments at fair value through profit or loss.

Prepare journal entries for 20 April 2020 and 30 June 2020.

b) On 1 May 2019, Mighty Zeus Ltd bought bonds originally issued for $100,000 (i.e., this was their face value) for $128,281. The bonds will be repaid in five years. The bonds have an interest rate of 8% payable at the end of the year, but due to cuts to the OCR, the current interest rate for similar debt is only 2%. Mighty Zeus Ltd accounts for debt instruments using the amortised cost method as shown in the table below:

Year	Open Bond Value $	Cash Received $	Interest Revenue $	Princip. Repayment $	Close Bond Value $
1	128,281	8,000	2,566	5,434	122,846
2	122,846	8,000	2,457	5,543	117,303
3	117,303	8,000	2,346	5,654	111,649
4	111,649	8,000	2,233	5,767	105,882
5	105,882	8,000	2,118	5,882	100,000

Prepare journal entries relating to the bonds for the year ending 30 April 2020.

c) As at 31 March 2020, Mighty Zeus Ltd has another financial instrument which is shares in Contact Energy Ltd. These shares were purchased for the purposes of making a gain on the investment.

Explain to Athena Turei, the CEO of Mighty Zeus Ltd, how the financial instrument should be accounted for at the end of each financial year. In your answer you should describe how the valuation for the financial instrument could be determined.