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FINANCIAL INSTRUMENTS

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › FINANCIAL INSTRUMENTS

Viewing 6 posts - 1 through 6 (of 6 total)
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  • March 15, 2021 at 10:53 am #614453
    ABDULLAHI312
    Participant
    • Topics: 106
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    • ☆☆☆

    Hi chris.

    Number 2 of example 1 on page 46 of lecture notes. could you please show what will happen in the derecognition phase using journal entries?
    number 3 of the same example. we got a discount on the par value but we worked out for redemption on the original par value attached to the debentures, why? also for coupon received.
    thanks.

    March 15, 2021 at 11:03 am #614454
    ABDULLAHI312
    Participant
    • Topics: 106
    • Replies: 97
    • ☆☆☆

    On the same note if i may. suppose Norman bought(number 3 of example 1) a convertible debentures what would be the treatment? in the later part of this chapter, i did understood the treatment of ISSUED convertible debentures. was wondering if the opposite happens, BUYING/INVESTING in convertible debentures.

    thanks, Chris. stay safe.

    March 17, 2021 at 7:45 pm #614636
    P2-D2
    Keymaster
    • Topics: 4
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    • ☆☆☆☆☆

    ABDULLAHI312 wrote:Hi chris.

    Hi Abdullah,

    I won’t give you the double entries just yet as I’ll challenge you to give it a go yourself. The asset will be removed, cash received and then a gain/loss on disposal will be recorded. Any gains held in reserves are transferred through retained earnings. See how you get on and let me know.

    For the redemption in the future the investor is only able to redeem at par, there is no premium on redemption. This will be the same for all convertible instruments.

    Thanks

    March 17, 2021 at 7:47 pm #614637
    P2-D2
    Keymaster
    • Topics: 4
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    • ☆☆☆☆☆

    ABDULLAHI312 wrote:On the same note if i may. suppose Norman bought(number 3 of example 1) a convertible debentures what would be the treatment? in the later part of this chapter, i did understood the treatment of ISSUED convertible debentures. was wondering if the opposite happens, BUYING/INVESTING in convertible debentures.

    Hello again!

    I like how you are thinking about the treatment of the investor for this instrument but it won’t be in the exam, so don’t worry too much about it.

    Thanks

    March 27, 2021 at 5:39 pm #615344
    MLAZIMILANO
    Participant
    • Topics: 0
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    • ☆

    Hi Chris,

    Quick question on Financial Reporting here,

    In example 3 on Financial Instruments, Alice issued one million 4% convertible debentures and the par value is 100million. When calculating this you multiplied 1 000 000 by 100. I’m kind of confused, isn’t it supposed to be 1 000 000 by 100mill to give 10e14?

    Other than that. Thank you so much for the lectures they make learning much easier to comprehend. Sometimes tuition providers explanations in their respective the study text’s can really cause a cranium explosion. hahaha!!

    Thanks.

    April 1, 2021 at 5:28 pm #615697
    P2-D2
    Keymaster
    • Topics: 4
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    Hi,

    Is the par value not $100 and not 100 million as you suggest? So that there are then 1,000,000 convertibles at $100 each.

    Thanks for the positive comment, it is always good to hear that we’re making a difference.

    Thanks

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