Y ltd purchased a debt security for sh$\mathrm{.}5$m at a discount for sh$\mathrm{.}4,670,000$ on $1$ st Jan,$2004.$The debt is repayable in $5$yrs time at an interest rate of $6\%$ p$.$a payable annually in arreas. The ERI of the investment is approximately $7\mathrm{.}65\%.$This is a discount rate that will give a present value of the future cash flow that equal to the price i$.$e$.$ the internal rate of return implied in the contract.

Required: Using amortized cost method, show the subsequent measurements assuming that the investment was classified as held to maturity 

a$)$ On $1$ st Jan, $2010$ KBLD Ltd rated a go down in industrial area. The agreement provided the payment of sh$\mathrm{.}500,000$ per year for $3$years, payable in advance.

Required:$-$

$($i$)$ Show ledger entries when the transaction was effected.

$($ii$)$ Show adjusting entries necessary as at $31$ st Dec, $2010$ and as $31$st Dec $2011.$

b$)$ Define and give examples of intangible assets..  

c$)$ With the use of examples, explain the purpose of assets to any business 

Answer rating: 100% (QA)

a Using amortized cost method and assuming the investment was classified as held to maturity i Ledger entries when the transaction was effected on 1st ... View the full answer