FINANCIAL ACCOUNTING 311 DEPARTMENT OF
IFRS 9: Financial Instruments
Solution to tutor question: ACCOUNTING
S Aboo Baker Ebrahim UP
QUESTION 1 – SUGGESTED SOLUTION (20 marks)
Journals
Dr Cr
1 March 2013 R R
J1 Investment in debentures / (or Financial asset at
amortised cost) (SFP) ^ [554 349 + 11 346] 565 695
Bank 565 695
28 February 2014
J2 Bank [R500 000^ x 12%^] 60 000 1
^ Interest income / Finance income (P/L)
[R565 695 ^ x 8,96%a (2)] 50 686
^ Investment in debentures / Financial asset at
amortised cost (balancing) (SFP) 9 314
28 February 2014
J3 Share investment – Equity instrument at fair value
through other comprehensive income (SFP) ^ 172 000
Mark-to-market reserve on equity instruments ^ 172 000
(OCI) [(R423 ^ – R380 ^) x 4 000 ^]
J4 31 January 2015
Share investment – (SFP) ^ 156 000
Mark-to-market reserve on equity instruments ^ 156 000
(OCI) [(R462 ^ – R423 (^)) x 4 000 ^]
J5 Bank - given 1 845 400 ^
Loss on sale of Sasol Shares (P/L) Balancing ^^ 2 600
Share investment – Equity instrument at fair value 1 848 000
through other comprehensive income (SFP) ^
J6 Mark-to-market reserve on equity instruments ^ (SCE) 547 800
Retained earnings (SCE) ^ 547 800
[R1 848 000 (^) – ((4 000^ x R320^) + 20 200^)]
28 February 2015
J7 Bank [R500 000 x 12%] 60 000 ^
^ Interest income / Finance income (P/L)
[(R565 695 (^) – 9 314 (^)) x 8,96%a (^)] 49 852
^ Investment in debentures / Financial asset at
amortised cost (balancing) (SFP) 10 148
a FV = – [500 000 + (500 000 x 2%) ^] PV = 565 695 ^
pmt = – 60 000 (R500 000 x 12%) ^ n=5 ^
Therefore i = 8,96 Must calculate effective rate.
IFRS 9: Financial Instruments
Solution to tutor question: ACCOUNTING
S Aboo Baker Ebrahim UP
QUESTION 1 – SUGGESTED SOLUTION (20 marks)
Journals
Dr Cr
1 March 2013 R R
J1 Investment in debentures / (or Financial asset at
amortised cost) (SFP) ^ [554 349 + 11 346] 565 695
Bank 565 695
28 February 2014
J2 Bank [R500 000^ x 12%^] 60 000 1
^ Interest income / Finance income (P/L)
[R565 695 ^ x 8,96%a (2)] 50 686
^ Investment in debentures / Financial asset at
amortised cost (balancing) (SFP) 9 314
28 February 2014
J3 Share investment – Equity instrument at fair value
through other comprehensive income (SFP) ^ 172 000
Mark-to-market reserve on equity instruments ^ 172 000
(OCI) [(R423 ^ – R380 ^) x 4 000 ^]
J4 31 January 2015
Share investment – (SFP) ^ 156 000
Mark-to-market reserve on equity instruments ^ 156 000
(OCI) [(R462 ^ – R423 (^)) x 4 000 ^]
J5 Bank - given 1 845 400 ^
Loss on sale of Sasol Shares (P/L) Balancing ^^ 2 600
Share investment – Equity instrument at fair value 1 848 000
through other comprehensive income (SFP) ^
J6 Mark-to-market reserve on equity instruments ^ (SCE) 547 800
Retained earnings (SCE) ^ 547 800
[R1 848 000 (^) – ((4 000^ x R320^) + 20 200^)]
28 February 2015
J7 Bank [R500 000 x 12%] 60 000 ^
^ Interest income / Finance income (P/L)
[(R565 695 (^) – 9 314 (^)) x 8,96%a (^)] 49 852
^ Investment in debentures / Financial asset at
amortised cost (balancing) (SFP) 10 148
a FV = – [500 000 + (500 000 x 2%) ^] PV = 565 695 ^
pmt = – 60 000 (R500 000 x 12%) ^ n=5 ^
Therefore i = 8,96 Must calculate effective rate.
