A
Bell Ltd is an Australian company issued $10 million convertible notes on 1 July 2020 that carry a nominal interest (coupon) rate of 5% per annum. They are redeemable on 30 June 2023 for cash or can be exchanged for ordinary shares in Bell Ltd on the basis of 20 shares for each $100 of note. The prevailing market interest rate for the notes without conversion options are 8%.

Required:
Using the information above, explain and show how this event would be reported in the financial statement of Bell for the year ended 30 June 2021.
Note: Marks will be awarded for both figures and explanation

B
There are three possible measurement bases namely amortised cost, fair value through other comprehensive income and fair value through profit and loss are identified by AASB 9 – Financial Instruments in the classification and measurement of financial Assets.

Required:
Explain how the AASB 9 requires entities to select the appropriate measurement basis for a financial asset. You should include any options available to entities regarding classification in your explanation.
Note: You are NOT required to define a financial asset.

C
On 20 July 2020, Corona Ltd an Australian based company provides some management consulting service to a company in Unites States of America called XYZ Incorporation for an agreed fee of US$1.5 million. The amount is paid into the US bank account of Corona Ltd onPage 4 of 10 20 July 2020. Corona Ltd elects to leave the amount in the US bank account, which pays interest each year on 30 June at a rate of five per cent. The relevant exchange rates are:
20 July 2020 A$1.00 = US$0.75
30 June 2021 A$1.00 = US$0.78

Required:
Provide the journal entries that would need to be made in the books of Corona Ltd to account for the above transaction for the year ending 30 June 2021.

Answer rating: 100% (QA)

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