每日一练F7 (INT) 答案回复可见
<p>5 Pingway issued a $10 million 3% convertible loan note at par on 1 April 2007 with interest payable annually in<br/>arrears. Three years later, on 31 March 2010, the loan note is convertible into equity shares on the basis of $100 of<br/>loan note for 25 equity shares or it may be redeemed at par in cash at the option of the loan note holder. One of the<br/>company’s financial assistants observed that the use of a convertible loan note was preferable to a non-convertible<br/>loan note as the latter would have required an interest rate of 8% in order to make it attractive to investors. The<br/>assistant has also commented that the use of a convertible loan note will improve the profit as a result of lower interest<br/>costs and, as it is likely that the loan note holders will choose the equity option, the loan note can be classified as<br/>equity which will improve the company’s high gearing position.<br/>The present value of $1 receivable at the end of the year, based on discount rates of 3% and 8% can be taken as:<br/>3% 8%<br/>$ $<br/>End of year 1 0·97 0·93<br/>2 0·94 0·86<br/>3 0·92 0·79<br/>Required:<br/>Comment on the financial assistant’s observations and show how the convertible loan note should be accounted<br/>for in Pingway’s income statement for the year ended 31 March 2008 and statement of financial position as at<br/>that date.<br/>(10 marks)</p><p></p><p>5 Accounting correctly for the convertible loan note in accordance with IAS 32 Financial Instruments: Presentation and IAS 39<br/>Financial Instruments: Recognition and Measurement would mean that virtually all the financial assistant’s observations are<br/>incorrect. The convertible loan note is a compound financial instrument containing a (largely) debt component and an equity<br/>component – the value of the option to receive equity shares. These components must be calculated using the residual equity<br/>method and appropriately classified (as debt and equity) on the statement of financial position. As some of the proceeds of the<br/>instrument will be equity, the gearing will not be quite as high as if a non-convertible loan was issued, but gearing will be increased.<br/>However, if the loan note is converted to equity in March 2010, gearing will be reduced. The interest rate that would be applicable<br/>to a non-convertible loan (8%) is representative of the true finance cost and should be applied to the carrying amount of the debt<br/>to calculate the finance cost to be charged to the income statement thus giving a much higher charge than the assistant believes.<br/>Accounting treatment: financial statements year ended 31 March 2008<br/>Income statement:<br/>Finance costs (see working) $693,920<br/>Statement of financial position:<br/>Non-current liabilities<br/>3% convertible loan note (8,674 + 393·92) $9,067,920<br/>Equity<br/>Option to convert $1,326,000<br/>Working (figures in brackets in $’000)<br/>cash flows factor at 8% present value $’000<br/>year 1 interest 300 0·93 279<br/>year 2 interest 300 0·86 258<br/>year 3 interest and capital 10,300 0·79 8,137<br/>–––––––<br/>total value of debt component 8,674<br/>proceeds of the issue 10,000<br/>–––––––<br/>equity component (residual amount) 1,326<br/>–––––––<br/>The interest cost in the income statement should be $693,920 (8,674 x 8%), requiring an accrual of $393,920 (693·92 – 300<br/>i.e. 10,000 x 3%). This accrual should be added to the carrying value of the debt.</p> tryutreuye 噢看 <p>see see</p> ok,well <p>look 1 look</p> <strong>每日一练F2</strong> ding hao wr have a look thx dig <p>谢谢!!</p> <p>谢谢!!!</p> 谢谢 thnaks页:
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