Question

The first financial instrument was a loan. On January 1, the company borrowed 5million on a key shareholder at rate of 3%, at that time when the market rate of interest was 5%. In order to convince the shareholder to lend the money to the company at a rate lower the the market rate of interest, the company agreed that, in 5 years the shareholder would have the option of either accepting full repayment of the debt, or receiving 500,000 shares in the company.

The second financial instrument was a compensatory stock option plan that was granted to 10 key management positions for the first time. The company wanted to provide these employees with additional compensation and due to financial constraints could not increase salaries. The plan allowed these management employees to purchase 5,000 options each to purchase shares at $50 each when they were actually worth $100. The options were granted on January 1, 2017 and were exercisable within a two year period. Total compensation was estimated to be $550,000. And the expected period of benefit was one year beginning on the grant date. No other management employees exercised their options during the year but you exercised all of your options on December 31st 2017.

The final transaction. The company decided to enter a contract to purchase U.S currency (December 15 2017). The company agreed to buy $7 million in U.S. currency for $7,070,000 (U.S. $1 = Canadian $1.01) from foreign currency inc. using a 90 day forward contract. Any changes to the Canadian dollars will be transferred to the company. On December 31, 2017 the new value was U.S. $1 = Canadian $ 1.02. Assume fair value of contract was 50,000$ at December 31, 2017

Required: Determine the carrying value of each statement of financial position item at year end, December 31, 2017, under both ASPE and IFRS.

Answer 1

iancal aostsument as sse hoe have cohn The option of ethen accept9ng.full 7ge payment ตั eevin 500,000 shooes to The c Compa . valute of ailt Step 2, 응 -y compute cash-loos and efecthve rtes e e YeM ash flooG E,I-R(5%) present Value of cash 31G30 : 5oo0 OO tmount or Scan

Step 8을 峯opening nterest @ 5% Repayment aange 456698o 98349 50,000 au5 339 So, the Cos amount of loan on 3l oec ãol 4a45 39 (31 second teldument. ;s stock opHong No, of Stock option fato, value of options vestn peartodl 5000 t So 关 Pn Thee opfong. 7.ap lave "to Cabalote 7he shee balance at evesy Yeoh end. employee -fair Value or opton no

a go d Resosed contact. * fit The Yenerd aom-The rea value uns ( us need to part only 0,10.o00 at The mtuoity date oF T contac to bay te U.s delasis , so has Psoved beneficial to-he company ft The 2 Crd The fair value of The contact endl tooud be so00 x i.oa) 4 Slooel = 15100