Each of the statements below is either true (T) or false (F). Required: According to NZ IFRS 7, NZ IRS 9 and NZ IAS 32, indicate for each of the statements whether it is T or F. If the statement is false, rewrite the statement to make it true, otherwise eave it blank. Item (a) (b) (c) Information & Statement Statement: A stronger NZ$ is good for NZ importers as the foreign currency denominated accounts payable will be converted into lower NZ$ value. Rewrite: Information: A NZ importer has bought a call option contract to fair value hedge its accounts payable US$50,000. The exercise rate in the option is 1$NZ = US$0.6 with a contract amount US$50,000. On settlement date, the spot exchange rate is 0.65. Statement: Therefore, the importer will exercise the option as the option value is worth NZ$6,410 on settlement date. Rewrite: Information: A company issued 1 million convertible notes on 1 January 2022. The arrangement of the notes is that the noteholder has the option to convert one note into one ordinary share on the expiry of the notes. The face value of T/F
Each of the statements below is either true (T) or false (F). Required: According to NZ IFRS 7, NZ IRS 9 and NZ IAS 32, indicate for each of the statements whether it is T or F. If the statement is false, rewrite the statement to make it true, otherwise eave it blank. Item (a) (b) (c) Information & Statement Statement: A stronger NZ$ is good for NZ importers as the foreign currency denominated accounts payable will be converted into lower NZ$ value. Rewrite: Information: A NZ importer has bought a call option contract to fair value hedge its accounts payable US$50,000. The exercise rate in the option is 1$NZ = US$0.6 with a contract amount US$50,000. On settlement date, the spot exchange rate is 0.65. Statement: Therefore, the importer will exercise the option as the option value is worth NZ$6,410 on settlement date. Rewrite: Information: A company issued 1 million convertible notes on 1 January 2022. The arrangement of the notes is that the noteholder has the option to convert one note into one ordinary share on the expiry of the notes. The face value of T/F
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Each of the statements below is either true (T) or false (F).
Required: According to NZ IFRS 7, NZ IRS 9 and NZ IAS 32, indicate for each of the statements
whether it is T or F. If the statement is false, rewrite the statement to make it true, otherwise
leave it blank.
Item
(a)
(b)
(c)
Information & Statement
Statement: A stronger NZ$ is good for NZ importers as the foreign currency
denominated accounts payable will be converted into lower NZ$ value.
Rewrite:
Information: A NZ importer has bought a call option contract to fair value hedge
its accounts payable US$50,000. The exercise rate in the option is 1$NZ = US$0.6
with a contract amount US$50,000. On settlement date, the spot exchange rate
is 0.65.
Statement: Therefore, the importer will exercise the option as the option value
is worth NZ$6,410 on settlement date.
Rewrite:
Information: A company issued 1 million convertible notes on 1 January 2022.
The arrangement of the notes is that the noteholder has the option to convert
one note into one ordinary share on the expiry of the notes. The face value of
each note is $1. The issue price of each note is $1.5. No transaction costs
associated with the issue.
Statement: Therefore, the company should present the liability component and
the equity component separately and recognise $1 million dollars as the total fair
value of the convertible notes on 1 January 2022.
Rewrite:
T/F
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