Homework Answers
- The purchase of shares by Milk Ltd on 1st January 2018 would be recorded at their fair value minus transaction costs under ‘Investments’ in Assets in the balance sheet of Milk Ltd. The recordded value of this investments is calculated below
|
Fair value of shares purchased on 1st January |
|
|
Market value of shares (20,000,000 shares * £ 2 / share) |
£ 40,000,000.00 |
|
Less: Transaction costs |
-£ 3,000,000.00 |
|
Fair value to be recorded in books of Milk Ltd as on 1st January |
£ 37,000,000.00 |
- On 31st December 2018, the movement in fair value will be presented as accumulated Other Comprehensive income under Shareholders Equity in the Balance sheet for the year as on 31st December, 2018. This amount is calculated as follows
|
Movement in fair value of shares |
|
|
Current market value of the investment (20,000,000 shares * £ 2.5 / share) |
£ 50,000,000.00 |
|
Less: Fair value of the investment recorded at the time of purchase |
-£ 37,000,000.00 |
|
Gain/(Loss) in the fair value recorded as Other Comprehensive income |
£ 13,000,000.00 |
- Dividend received on 31st December is recognized as income in the Profit and Loss/Income statement of Milk Ltd. Dividend income is calculated as follows:
£ 0. £ 0.05 per share * 20,000,000 shares = £ 1,000,000
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2) In January 2018, Milk Ltd purchased 20 million £1 listed equity shares at a price...
Milk Ltd has the following financial instrument issued: 1) On 1 April 2018 an 8% £30...
Milk Ltd has the following financial instrument issued: 1) On 1 April 2018 an 8% £30 million convertible loan note was issued at par. Interest is payable in arrears on 31 March each year. The loan note is redeemable at par on 31 March 2021 or convertible into equity shares at the option of the loan note holders on the basis of 30 shares for each £100 of loan. A similar instrument without the conversion option would have an interest...
Milk Ltd has the following financial instrument issued: 1) On 1 April 2018 an 8% £30...
Milk Ltd has the following financial instrument issued: 1) On 1 April 2018 an 8% £30 million convertible loan note was issued at par. Interest is payable in arrears on 31 March each year. The loan note is redeemable at par on 31 March 2021 or convertible into equity shares at the option of the loan note holders on the basis of 30 shares for each £100 of loan. A similar instrument without the conversion option would have an interest...
Milk Ltd has the following financial instrument issued: 1) On 1 April 2018 an 8% £30...
Milk Ltd has the following financial instrument issued: 1) On 1 April 2018 an 8% £30 million convertible loan note was issued at par. Interest is payable in arrears on 31 March each year. The loan note is redeemable at par on 31 March 2021 or convertible into equity shares at the option of the loan note holders on the basis of 30 shares for each £100 of loan. A similar instrument without the conversion option would have an interest...
3) In March 2016, Milk Ltd purchased 5 million £3 listed bond and classified it as...
3) In March 2016, Milk Ltd purchased 5 million £3 listed bond and classified it as an investment financial instrument within "held to collect and sell” business model. The current market value of bonds is £8.65 million, while they were bought for £14.3 million. How should the financial instruments of Milk Ltd be accounted for in the statement of financial position of Milk Ltd at 31 December 2018?
Page Break 3. On January 1, 2018 Big Basket Corporation purchased 30,000 shares (5%) of Training...
Page Break 3. On January 1, 2018 Big Basket Corporation purchased 30,000 shares (5%) of Training Camp Corporation for $50,000 and 50,000 Shares (35%) of Energy Power Drink Inc. for $80,000 both as long term investments. On December 31, 2018 Training Camp declared $1 dividend payment per share, and Energy Power Drink Inc. report its Net Income as $55,000 and paid $0.50 per share dividend payment. At year end December 31, 2018 Training Camp Corporation shares are trading at $2.50...
3. On January 1, 2018 Big Basket Corporation purchased 30,000 shares (5%) of Training Camp Corporation...
3. On January 1, 2018 Big Basket Corporation purchased 30,000 shares (5%) of Training Camp Corporation for $50,000 and 50,000 Shares (35%) of Energy Power Drink Inc. for $80,000 both long term investments. On December 31, 2018 Training Camp declared $1 dividend payment per share, and Energy Power Drink Inc. report its Net Income as $55,000 and paid $0.50 per share dividend payment. At year end December 31, 2018 Training Camp Corporation shares are trading at $2.50 per share, whereas...
3. On January 1, 2018 Big Basket Corporation purchased 30,000 shares (5%) of Training Camp Corporation...
3. On January 1, 2018 Big Basket Corporation purchased 30,000 shares (5%) of Training Camp Corporation for $50,000 and 50,000 Shares (35%) of Energy Power Drink Inc. for $80,000 both as long term investments. On December 31, 2018 Training Camp declared Si dividend payment per share, and Energy Power Drink Inc. report its Net Income as $55,000 and paid $0.50 per share dividend payment At year end December 31, 2018 Training Camp Corporation shares are trading at $2.50 per share,...
3. On January 1, 2018 Big Basket Corporation purchased 30,000 shares (5%) of Training Camp Corporation...
3. On January 1, 2018 Big Basket Corporation purchased 30,000 shares (5%) of Training Camp Corporation for $50,000 and 50,000 Shares (35%) of Energy Power Drink Inc. for $80,000 both as long term investments. On December 31, 2018 Training Camp declared $1 dividend payment per share, and Energy Power Drink Inc. report its Net Income as $55,000 and paid $0.50 per share dividend payment. At year end December 31, 2018 Training Camp Corporation shares are trading at $2.50 per share,...
On January 1, 2018, Sweetwater Ltd., a private company, had the following shareholders' equity accounts: Preferred...
On January 1, 2018, Sweetwater Ltd., a private company, had the following shareholders' equity accounts: Preferred shares, $1 noncumulative, unlimited number authorized, none issued Common shares, unlimited number authorized, 2.06 million issued Retained earnings $2,860,000 3,470,000 The following selected transactions occurred during 2018: Jan. 2 Issued 210,000 preferred shares at $25 per share. Feb. 8 Issued 100,000 common shares in exchange for land. On this date, the current value of the land was $210,000. The common shares have not recently...
QUESTION 27 Manitoba Ltd. Purchased 1,000 shares of Spectrum Company for $20 per share on January...
QUESTION 27 Manitoba Ltd. Purchased 1,000 shares of Spectrum Company for $20 per share on January 1 Year 1. Manitobal chose to classify this equity investment as FVOCI. On December 31, Year 1, the market price of Spectrum’s stock was $23. On March 1, Year 2, all 1,000 shares of Spectrum’s stock were sold for $24 per share. Under IFRS, on December 31, Year 1, the journal entry for this equity investment would include: A. A credit to Other comprehensive...
Milk Ltd has the following financial instrument issued: 1) On 1 April 2018 an 8% £30 million convertible loan note was issued at par. Interest is payable in arrears on 31 March each year. The loan note is redeemable at par on 31 March 2021 or convertible into equity shares at the option of the loan note holders on the basis of 30 shares for each £100 of loan. A similar instrument without the conversion option would have an interest...
Milk Ltd has the following financial instrument issued: 1) On 1 April 2018 an 8% £30 million convertible loan note was issued at par. Interest is payable in arrears on 31 March each year. The loan note is redeemable at par on 31 March 2021 or convertible into equity shares at the option of the loan note holders on the basis of 30 shares for each £100 of loan. A similar instrument without the conversion option would have an interest...
Milk Ltd has the following financial instrument issued: 1) On 1 April 2018 an 8% £30 million convertible loan note was issued at par. Interest is payable in arrears on 31 March each year. The loan note is redeemable at par on 31 March 2021 or convertible into equity shares at the option of the loan note holders on the basis of 30 shares for each £100 of loan. A similar instrument without the conversion option would have an interest...
3) In March 2016, Milk Ltd purchased 5 million £3 listed bond and classified it as an investment financial instrument within "held to collect and sell” business model. The current market value of bonds is £8.65 million, while they were bought for £14.3 million. How should the financial instruments of Milk Ltd be accounted for in the statement of financial position of Milk Ltd at 31 December 2018?
Page Break 3. On January 1, 2018 Big Basket Corporation purchased 30,000 shares (5%) of Training Camp Corporation for $50,000 and 50,000 Shares (35%) of Energy Power Drink Inc. for $80,000 both as long term investments. On December 31, 2018 Training Camp declared $1 dividend payment per share, and Energy Power Drink Inc. report its Net Income as $55,000 and paid $0.50 per share dividend payment. At year end December 31, 2018 Training Camp Corporation shares are trading at $2.50...
3. On January 1, 2018 Big Basket Corporation purchased 30,000 shares (5%) of Training Camp Corporation for $50,000 and 50,000 Shares (35%) of Energy Power Drink Inc. for $80,000 both long term investments. On December 31, 2018 Training Camp declared $1 dividend payment per share, and Energy Power Drink Inc. report its Net Income as $55,000 and paid $0.50 per share dividend payment. At year end December 31, 2018 Training Camp Corporation shares are trading at $2.50 per share, whereas...
3. On January 1, 2018 Big Basket Corporation purchased 30,000 shares (5%) of Training Camp Corporation for $50,000 and 50,000 Shares (35%) of Energy Power Drink Inc. for $80,000 both as long term investments. On December 31, 2018 Training Camp declared Si dividend payment per share, and Energy Power Drink Inc. report its Net Income as $55,000 and paid $0.50 per share dividend payment At year end December 31, 2018 Training Camp Corporation shares are trading at $2.50 per share,...
3. On January 1, 2018 Big Basket Corporation purchased 30,000 shares (5%) of Training Camp Corporation for $50,000 and 50,000 Shares (35%) of Energy Power Drink Inc. for $80,000 both as long term investments. On December 31, 2018 Training Camp declared $1 dividend payment per share, and Energy Power Drink Inc. report its Net Income as $55,000 and paid $0.50 per share dividend payment. At year end December 31, 2018 Training Camp Corporation shares are trading at $2.50 per share,...
On January 1, 2018, Sweetwater Ltd., a private company, had the following shareholders' equity accounts: Preferred shares, $1 noncumulative, unlimited number authorized, none issued Common shares, unlimited number authorized, 2.06 million issued Retained earnings $2,860,000 3,470,000 The following selected transactions occurred during 2018: Jan. 2 Issued 210,000 preferred shares at $25 per share. Feb. 8 Issued 100,000 common shares in exchange for land. On this date, the current value of the land was $210,000. The common shares have not recently...
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