[will12]

oo wow. yes you are right. Such small things.. can cause issues in an exam. Its always things to do with dates and time apportionment with f7!!! I am worried ;-(

thanks Mike

[will12]

Mike- on the topic of deferred tax.. I saw somewhere that “IAS 12 prohibits the recognition of deferred tax on taxable temp differences that arise from the initial recognition of goodwill. Why is this? I cant see the link/ logic?

[will12]

as always cheers mike.

[will12]

hhmm.. ok. I will have a read and see if I can answer the ques again.. with this in mind.

[will12]

hhm interesting comment for point C.

thanks for clarifying point B.

[will12]

ahhhhhh ok ok!! my mistake!!! I will rework.

cheers

[will12]

actually..no worries.. i think the poster was inaccurate.. i don’t need you to confirm that.. I have already myself.. just wanted re-assurance.. but no time to waste.. on something so small!

thanks Mike

[will12]

ok but if you were to use the information from the question.. which is what I did for practise to see if I can do the question…

$80 million 8% convertible loan note. The term of conversion is $100 of loan note will be converted into 50 equity in 5 year time. Effective interest rate is 12%. calculate the liability/ equity.

then the PV of convertible loan note = $80m*0.57 (DF @12% 5 YEARS)=45.6M not the 86400*0.57= 49248 as the original poster suggested.. I just want to see if there is something I am missing.. if I was to take the question at face value? do you follow sir?

[will12]

Cheers. thanks. makes sense.

[will12]

sorry. not sure I follow sir. where did the 1,333,333 come from? where did the 1,000,000 come from. thanks where in the question can I see information that will give me those figures?

[will12]

hhmm sir..

I am not sure I follow your calculation..

1.10.06 15,000,000 12/12 15,000,000
yes I get this calculation… the 15M shares in October.

1. 1.07 4,000,000 9/12 3,000,000

ok yes I get this calculation.. there is 9 months from 1st of jan to 31st sep.. so you have 9/12 * 4m shares = 3m shares

1. 1.07 5,000,000 12/12 5,000,000

ok yes, this is the bonus issue 1/3*15million= 5m

1. 1.07 1,333,333 9/12 1,000,000

what in the question tells us/hints to take 9/12th of 1M shares? where did you get the 1M shares from?

[will12]

ok. thanks 😉

[will12]

hhmm Mike.. where does the original poster get the PV of the redeemable to be 86400*0.57= 49248.. I know this is an old question.. but approach/ calculation should stay the same?

I would have done this:

PV of interest payments=$80m*8% =6400*3.04 (CDF @12% 5 YEARS)= 19456 *agreed with original poster*

PV of redeemable= $80m*0.57 (DF @12% 5 YEARS)=45.6M ????? where did he get the 86.4M from? should it not be 80M??

Where have I gone wrong?

[will12]

nice question. I tried working it out but got stuck. I have not seen a question with two rights issues in one financial year.

my workings:

with right issues we * the shares before the rights issue by the rights fraction.

From 1st Jan to 31st Jan= 1/12 *5m
31st Jan we have a rights issue 1/4*5m= 1250000
31st Jan to 30th June= 5/12*1250000=
30th June we bought= 125,000 shares
30th Nov we have a rights issue 1/10* (total of shares at 1st Jan/ 31st Jan & 3oth June) this is my confusion… so will it be 1/10*(5m+1250000+125000)?

thanks

[will12]

I know but Sir what does traded at par? what does it mean?

[will12]

ahhh ok. I see your point. thanks

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