Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › cross wire 12/09 part ii
- This topic has 5 replies, 2 voices, and was last updated 9 years ago by MikeLittle.
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- May 19, 2014 at 6:54 pm #169540
Sir
please explain how the premium of 2400 is calculated ?May 20, 2014 at 6:45 am #16959975% of $4m loan converted to shares at the rate of 20 shares per $100 loan
That’s $3m / 100 * 20 shares issued = 600,000 shares of $1 each
Debit loan notes, credit share capital with $600,000
But, following that issue, the amount of the loan liability has fallen by $3m so the shares must nave been worth $5 each.
600,000 shares issued at a value of $5 means 600,000 at $1 face value plus 600,000 premium of $4 each = $2,400,000
OK?
May 26, 2014 at 3:14 pm #170947ok Sir but one thing still doubtful is that in note iii it is mentioned that 4ooo of the convertible loan notes matured so there are still 1000 left i mean there are still 1000 in 20X9 why did u take the difference of 4000 and 1000 shouldnt that be 4000 ?
and Sir on more thing plz explain how come loan notes redeemed = 1000
is it 600+400( bln. fig)May 26, 2014 at 4:34 pm #170966The two balance sheets clearly show that loan notes outstanding last year were $5,000 and this year they are $1,000
That ties in nicely with “during the year $4,000 loan notes matured”
The question goes on to say that 75% exercised the equity option and the above post from me explains why that results in a premium movement of $2,400
“still 1000 in 20X9 why did u take the difference of 4000 and 1000 shouldnt that be 4000” Heaven knows what you’re talking about! I have no idea
“and Sir on more thing plz explain how come loan notes redeemed = 1000 is it 600+400( bln. fig)” If 75% of $4,000 exercise the share option on conversion, what did the other 25% do? And how much is 25% of $4,000?
OK?
May 26, 2014 at 4:45 pm #170968yes Sir sorry for silly question !!!! all that confusion was due to not taking account of 25%..u made it clear
Thank youMay 26, 2014 at 4:54 pm #170972You’re welcome
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