a) On 20 January 2022 Baine Ltd purchased 25,000 shares in Lindt Ltd for a cash...

  

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a) On 20 January 2022 Baine Ltd purchased 25,000 shares in Lindt Ltd for a cash consideration of $20 per share. Transaction costs $2,500 were also paid this transaction on 20 January 2023. The fair value of the Lindt Ltd's shares at 30 June 2022 was $22.80 per share. Explain how Baine Ltd would classify their investment in the Lindt. b) On 1 July 2022 Baine Ltd purchased a group of corporate bonds with the following terms: ▶ Face value: $3,300,000 ➡ Cash purchase price (fair value): $3,000,000 ➡ Term: 5 years Nominal interest: 5% payable 30 June each year Effective interest rate 7.23% There were no transaction costs and Baine Ltd has classified this group of corporate bonds into the amortised cost financial asset category. Required: Explain one reason why Baine Ltd would classify this group of corporate bonds into the amortised cost financial asset category? a) On 20 January 2022 Baine Ltd purchased 25,000 shares in Lindt Ltd for a cash consideration of $20 per share. Transaction costs $2,500 were also paid this transaction on 20 January 2023. The fair value of the Lindt Ltd's shares at 30 June 2022 was $22.80 per share. Explain how Baine Ltd would classify their investment in the Lindt. b) On 1 July 2022 Baine Ltd purchased a group of corporate bonds with the following terms: ▶ Face value: $3,300,000 ➡ Cash purchase price (fair value): $3,000,000 ➡ Term: 5 years Nominal interest: 5% payable 30 June each year Effective interest rate 7.23% There were no transaction costs and Baine Ltd has classified this group of corporate bonds into the amortised cost financial asset category. Required: Explain one reason why Baine Ltd would classify this group of corporate bonds into the amortised cost financial asset category?

Answer rating: 100% (QA)

a Baine Ltd would classify their investment in Lindt Ltd as Fair Value through Profit or Loss FVPL or Available for Sale AFS depending on their intent... View the full answer