Ynt: ACCA Hakkında Bilgilerimizi Paylaşalım..
bu arada biraz fikir verir diye bir soru postaladim - yalniz bu soru en korkunc sinavin ( Advance Corporate reporting) sorularindan biri. o yuzden moralinizi bozmasin.
Financial instruments
One of the greatest challenges facing the accountancy profession today is the accounting treatment of
financial instruments. Internationally, IAS 39 deals with the recognition and measurement of financial
instruments, IAS 32 deals with presentation, while IFRS 7 deals with the disclosure aspects.
Revisions were made recently to IAS 32 and IAS 39 aimed at streamlining and simplifying the
standards. The IASB has indicated that the revised IAS 32 and IAS 39 will remain in place as part of
the 'stable platform' developed for 2005 for some time.
Draft financial statements have been prepared for JJW, a public limited company, and these show a
profit before tax of $1,110,000 for the year ended 30 September 20X6, but no accounting entries have
been made in respect of the financial instruments.
The following information relates to the financial instruments held by JJW during the year:
(i) $1,200,000 6% 4 year bonds issued by JJW at a discount of 3?% on 1 October 20X5. The
internal rate of return of the debt is 7%.
(ii) 6% debentures in LKW, redeemable at par on 30 September 20X7 with interest paid annually
on 30 September. JJW had paid $500,000 (the nominal value) for the debentures on 1
October 20X5. JW intends to hold these debentures until their maturity date. Market rates for
similar debentures were 7% on 30 September 20X5 and throughout the year to 29 September
20X6 and 7.5% on 30 September 20X6.
On 16 October 20X6, JJW was notified that due to financial difficulties, LKW will only be able
to repay $400,000 on the original maturity date. All interest will however be paid in full.
(iii) 150,000 $1 ordinary shares issued at par when JJW was set up in 20X4 and a further 50,000
$1 ordinary shares issued on 1 January 20X6 at $2.40 per share. Issue costs amounted to
$2,000 in 20X4 and $1,500 in 20X6. Market value of each share was $3.00 at 30 September
20X5 and $3.50 at 30 September 20X6.
(iv) 250,000 $1 redeemable preference shares issued at par by JJW on 1 October 20X5 with a
dividend rate of 7%. Market interest rates on similar shares were 7% throughout the year
ended 30 September 20X6. Open market value of the shares is equal to book value.
(v) Shares held as an investment in another company BCW. The shares were bought in March
20X5 for $99,000 inclusive of transaction costs of $1,000. Open market value of the shares
was $120,000 at 30 September 20X5. The shares were sold for $114,000 in August 20X6.
JJW?s accounting policy states that fair values are determined by reference to open market values
where available and where not available by discounting the relevant cash flows at a market rate of
interest on similar instruments.
Required
(a) Prepare a calculation of the revised profit before tax after making the necessary adjustments in
respect of the financial instruments. Include an explanation of the treatment of each of the
financial instruments. (11 marks)
(b) There has been a great deal of debate over the accounting treatment of financial instruments,
particularly over the increased use of fair values. Discuss the benefits and drawbacks of using
fair values to measure financial instruments and how these remeasurements are presented in
the statement of comprehensive income. (6 marks)
