Organic Farms Ltd has a 31 December year end. The following transactions relate to Organic Farms Ltd:

Transaction 1

Organic Farms Ltd acquired 20 000 shares in Invest Ltd for N$12,50 per share on 1 June 2020. Transaction costs amounted to N$2 500. On 30 June 2021 Organic Farms decided to sell 5 000 of these shares when they were trading at N$12,00 each. The fair value of these shares as at 31 December 2020 was N$11,00 per share and N$11,50 as at 31 December 2021.

Transaction 2

Organic Farms Ltd acquired 30 000 shares in Wealthy Ltd for capital appreciation purposes for N$10,50 per share on 1 January 2019. Transaction cost amounted to N$3 000. The fair value of these shares as at 31 December 2019 was N$9,50 per share. As at 31 December 2020 the share price decreased to N$7,00 per share. At 31 December 2021 the share price improved to N$11,00 per share. Organic Farms Ltd elected in terms of IFRS 9.5.7.5 to present subsequent changes in the fair value of the shares in other comprehensive income.

Transaction 3

Organic Farms Ltd borrowed N$98 500 cash from Windhoek Bank Ltd on 1 January 2020. The loan is repayable in four equal instalments of N$33 475 at the end of each year. The effective interest rate is 13.522%. On 1 January 2021, after paying the first instalment in 2020, Organic Farms Ltd was able to renegotiate the terms of the loan payable in order to improve its cash position for the next three years. On the same day, Organic Farms Ltd settled the loan by issuing 10 000 of its own ordinary shares, at a price of N$8 each, as full and final settlement of the loan payable. Any gains or losses on settlement are recognised in profit and loss

Required:

1.Transaction costs are capitalised when the asset is classified as at fair value through profit and loss? True or False

2. The fair value gain/loss recognised at the end of the 2020 financial year was?

3. The total fair value gain/loss recognised for the 2021 financial year is?

4. The fair value gain/loss recognised at the end of the 2019 financial year was: This is related to Transaction 2

5. The fair value gain/loss recognised at the end of the 2020 financial year was: This is related to Transaction 2

6. The fair value gain/loss recognised at the end of the 2021 financial year was: Use Transaction 2

7.The present value of the loan on initial recognition is? Transaction 3

8. The closing balance of the loan on 31 December 2020 was : Use Transaction 3

9. On settlement of the loan on 1 January 2021, the following gain/loss is recognised : Use Transaction 3

Answer rating: 100% (QA)

1 false 2 2000 3 4000 4 3000 5 3000 6 4000 7 97000 8 97000 9 2000 EXPLANATION 1 Transaction costs a... View the full answer