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Finance instruments

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Finance instruments

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  • May 12, 2021 at 12:11 pm #620396
    Bonnie03
    Member
    • Topics: 1
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    • ☆

    ACBP7311: Financial Instruments

    ADDITIONAL QUESTIONS – FINANCIAL INSTRUMENTS

    Question 1
    Apple Ltd. is an investment company with a 28 February year-end. On 26 February 2016, Apple Ltd. purchased 200 shares at R150 per share in Maps Ltd. The shares were bought as part of the trading portfolio of Apple Ltd. The transaction costs incurred to finalise the transaction amounted to R512. Apple Ltd. paid the purchase and transaction costs on 2 March 2016.
    The fair values of the Maps Ltd. shares were as follows:
    28 February 2016?? R151,00
    2 March 201??6 R152,20

    REQUIRED:
    Prepare the journal entries for the above transactions in the accounting records of Apple Ltd. for the period 26 February 2016 to 2 March 2016.

    Hi sir . May you please help me with this question I don’t understand y they added the transaction cost on the solution given to us.

    May 12, 2021 at 7:05 pm #620434
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7172
    • ☆☆☆☆☆

    Hi,

    The initial recognition of the transaction is at fair value plus transaction cost. So, when you paid the initial amount (200 shares at R150) then you need to add on the R512.

    Thanks

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