Shoppers Ltd ("Shoppers") is a diversified listed Australian company whose operations include a chain of retail stores in Australian capital and regional cities. As part of its 2050 zero carbon emission strategic objective, Shoppers will issue 200,000 climate bonds on 1 July 2021. The climate bonds will have an issue price of $98, a face value of $100 at their maturity date on 1 July 2026 and a coupon rate of 1.75%. Shoppers will incur $150,000 of legal fees and underwriting costs on 1 July 2021 to issue the climate bonds. In accordance with Shoppers Corporate Finance Model, the climate bonds will not be used for derivative purposes nor repaid before their 1 July 2026 maturity date. Shoppers is planning to use proceeds from the climate bonds debt issue to finance the acquisition and installation of solar panels in their retail stores. The solar panels will be a new class of assets in Shoppers' financial statements for the year ended 30 June 2022. You are part of the Shoppers' Climate Bonds Transaction Group and have been assigned the responsibility of considering the accounting policy choice and financial reporting implications for the solar panels and climate bonds debt instrument transactions.

Describe how the climate bonds debt instrument will: (a)affect individual line items, account balances, and total asset and liability amounts presented in the company's future years' statements of profit or loss and financial position.

Answer rating: 100% (QA)

The climate bonds debt instrument will be able to increase the longterm debts or payables line items ... View the full answer