Q: On 1 January 2009 Hazell plc borrows €5 million on terms
On 1 January 2009 Hazell plc borrows €5 million on terms with interest of 3% fixed for the period to 31 December 2009, going to variable rate thereafter (at inception the variable rate is 6%). The loa...
See AnswerQ: The following is an extract from the trial balance of Imecet at
The following is an extract from the trial balance of Imecet at 31 October 2005: Other relevant information: (i) One million $1 ordinary shares were issued 1 May 2005 at the market price of $1.75 pe...
See AnswerQ: Baudvin Ltd has an equity investment that cost €1 million on
Baudvin Ltd has an equity investment that cost €1 million on 1 January 2008. The investment is classified as an available-for-sale investment under IAS 39. The value of the investment at each period-e...
See AnswerQ: A company borrows on a floating-rate loan, but wishes
A company borrows on a floating-rate loan, but wishes to hedge against interest variations so swaps the interest for fixed rate. The swap should be perfectly effective and has zero fair value at incep...
See AnswerQ: Charles plc is applying IAS 32 and IFRS 9 for the first
Charles plc is applying IAS 32 and IFRS 9 for the first time this year and is uncertain about the application of the standard. Charles plc’s balance sheet is as follows: Note The f...
See AnswerQ: Tan plc has the following assets originated on 1 January 2016:
Tan plc has the following assets originated on 1 January 2016: (i) A loan receivable generated from lending £100,000 to a customer of the company. The loan carries interest at 7% per annum payable in...
See AnswerQ: At the start of the year Cornish plc entered into a number
At the start of the year Cornish plc entered into a number of financial instruments and is considering how to classify these instruments under IFRS 9. The instruments are as follows (a) Investment in...
See AnswerQ: (a) IAS 16 Property, Plant and Equipment requires that
(a) IAS 16 Property, Plant and Equipment requires that where there has been a permanent diminution in the value of property, plant and equipment, the carrying amount should be written down to the reco...
See AnswerQ: Procter Limited, a UK private company has the following financial assets
Procter Limited, a UK private company has the following financial assets and liabilities in the accounts: (i) An equity investment in Milner plc, a UK listed company. Procter recognises the investment...
See AnswerQ: The approach in IAS 39 to the impairment of financial assets was
The approach in IAS 39 to the impairment of financial assets was flawed because it did not allow financial institutions to recognize the true losses they expected on loans at the time they had made th...
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