Simba Pty Ltd purchased debentures in Town Pty Ltd on January at a fair value of R
The face of the debentures is R and interest is paid annually in arrears at a coupon rate of per annum.
The debentures will be redeemed at a premium of R on December The subsequent fair values of the
debentures were as follows:
December and January
December and January
The debentures have never been creditimpaired and there have been no significant increases in the credit risk of
the debentures since their initial recognition. Expected credit losses were estimated as:
The debentures were classified at amortised cost on initial recognition but need to be reclassified to fair value
through other comprehensive income FVOCIdebt The reason for the reclassification is that on September
Revolution purchased another business, which was immediately, tasked with managing the debentures as part of
one of its portfolios of assets. The portfolio is managed to simply collect the contractual cash flows.
Task:
Show the journals for the year ended December and December
Marks
