Financial liabilities FOREIGN EXCHANGE

Chapter 20 – Financial Instruments Page 300 23. The Humphreys Company issued 10,000 warrants for CU2 cash each on 1 June 20X5. Each warrant gives the holder the right to acquire one new CU1 ordinary share for CU16 during the next four years. The market value of each warrant at 31 December 20X5 was CU5. In accordance with IAS32 Financial instruments: presentation, at what amount should the warrants be presented in Humphreyss statement of financial position at 31 December 20X5? A CU20,000 B CU10,000 C CU160,000 D CU50,000 24. The Murrie Company has hedged the cash flows relating to its interest rate risk by purchasing an interest rate cap. Interest rates have risen and the hedge has proved to be 90 effective based on the amount hedged. Additional interest charges up to the end of the financial year amount to CU24,000. In accordance with IAS39 Financial instruments: recognition and measurement, what amount relating to the additional interest costs should be recognised in profit or loss? A Nil B CU2,400 C CU21,600 D CU24,000 25. On 31 December 20X4 The Grenfell Company issued 200 convertible bonds with a nominal interest rate of 7 for CU20 each. Each bond can be converted into 5 new equity shares or redeemed for cash, at the option of the holder, in 5 years time. The fair value at that date of similar bonds without the convertibility option was estimated at CU18 each. In accordance with IAS32 Financial instruments, presentation, the amount recognised in equity in respect of the convertible bonds at 31 December 20X4 will be A CU4,000 B CU3,600 C CU400 D Nil 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