Setia Maju Property Bhd $($SMPB$)$ is a medium size property developer company that is listed in the

Bursa Malaysia. On $1$ January $2019,$ SMPB acquired $20,000$ quoted shares of Kumari Manufacturing

Berhad $($KMB$)$ at RM$5$ per share through cash. These $20,000$ shares represent $5\%$ of KMPB$$s total

shares. Transaction cost that SMPB incurred was RM$1,000.$ The fair value of each of this share on $31$

December $2019$ was RM$5\mathrm{.}50.$ KMB shares were eventually sold for RM$120,000$ in January $2020.$

On $1$ January $2019,$ SMPB purchased a debt instrument that will mature in FOUR $(4)$ years$$ time for

RM$6$ million, which is its fair value. The face value of the instrument is RM$7$ million with a notional

interest rate of $5\mathrm{.}5\%.$ The market interest rate for similar debt is $10\%.$ SMPB classified the debt as

measured at amortized cost.

On $31$ December $2019,$ SMPB issued bonds for total consideration of RM$10$ million. SMPB incurred

transaction cost for RM$50,000.$ The face value of the bond is RM$12$ million.

Required:

a$)$ Assess whether KMB$$s shares are considered as a form of a financial instrument as defined in

MFRS $9$ Financial Instruments.

$(4$ marks$)$

b$)$ Prepare journal entries that SMPB will record in their accounting books for the year ended $2019$

and $2020$ for below mentioned transactions: Record the transactions using Trade Date method.

i$.$ KMB$$s shares $$ classified as fair value through profit or loss.

ii$.$ KMB$$s shares $$ classified as fair value through other comprehensive income.

iii. The bonds at amortized cost.

$(8$ marks$)$

c$)$ Calculate the value of the debts instrument, interest income and cash flow that SMPB will

receive from the date of the debt$$s purchase to maturity date.

$(8$ marks$)$

d$)$ Prepare an extract of SMPB$$s Statement of Profit or Loss and Statement of Financial Position at

the end of $2019$ year, based on the accounting treatment discussed in $($b$)$ and $($c$)$ above.