Qualifying for hedge accounting

Chapter 20 – Financial Instruments Page 301 26. The Polar Company issued 200 new CU1 ordinary shares at a fair value of CU1.80 each. Polar identified the following costs in relation to the share issue: 1 Professional fees of CU40. 2 Internal management time in managing the process of CU30. These costs are deductible in arriving at the entitys income tax liability. The current rate of tax is 30. In accordance with IAS32 Financial instruments: presentation, the increase in equity in the statement of financial position of Polar as a result of the transaction will be A CU360 B CU332 C CU311 D CU320 27. The Rattigan Company purchases CU20,000 of bonds. The asset has been designated as one at fair value through profit and loss. One year later, 10 of the bonds are sold for CU4,000. Total cumulative gains previously recognised in Rattigans financial statements in respect of the asset are CU1,000. In accordance with IAS39 Financial instruments: recognition and measurement, what is the amount of the gain on disposal to be recognised in profit or loss? A CU1,900 B CU900 C CU2,000 D CU1,000 28. The Pink Company acquired an available-for-sale financial instrument for CU80 on 31 March 20X8. The direct acquisition costs incurred were CU14. On 31 December 20X8 the fair value of the instrument was CU110 and the transaction costs that would be incurred on sale were estimated at CU12. In accordance with IAS39 Financial instruments: recognition and measurement, what gain would be recognised in the financial statements for the year ended 31 December 20X8? A Nil B CU4 C CU42 D CU16 Chapter 20 – Financial Instruments Page 302 29. The Grovemet Company acquired a financial asset at its market value of CU32. Brokers fees of CU2 were incurred in relation to the purchase. In accordance with IAS39 Financial instruments: recognition and measurement at what amount should the financial asset initially be recognised if it is classified as at fair value through profit or loss, or as available for sale? At fair value through Available profit or loss for sale A CU34 CU32 B CU32 CU32 C CU32 CU34 D CU34 CU34 30. The Redmires Company acquired an equity investment a number of years ago for CU300 and classified it as available for sale. At 31 December 20X5 the cumulative loss recognised in other comprehensive income was CU40 and the carrying amount of the investment was CU260. At 31 December 20X6 the issuer of the equity was in severe financial difficulty and the fair value of the equity investment had fallen to CU120. In accordance with IAS39 Financial instruments, recognition and measurement, what amount should be recognised in profit or loss in the year ended 31 December 20X6? A CU140 B CU180 C CU100 D Nil