Gramax Health Bhd (GHB), a company operates in a health industry, is working in a project to develop a test kit that is able to determine the level of immunity a person has towards Covid- 19 based on his or her antibodies with higher accuracy rate compared with other similar test kits that are available in the market. In a recent business combination, GHB acquires a research and development (R&D) project of Vital Life Bhd (VLB) to develop a similar test kit with the one it develops. GHB does not intend to complete the project that had been acquired as it would compete with its own project. Its main intention to acquire the project is to prevent its competitors from obtaining access to the technology. Meanwhile, as part of its effort to fund its R&D projects, on 31 December 2019 GHB issued at par in a private placement a RM3 million 5-year fixed rate bond with an annual 10% interest coupon rate. On 31 December 2020, GHB's credit spread has deteriorated due to a change in its non-performance risk If the bond was issued on 31 December 2020, the instrument would need to have an interest rate of 11%. In reducing its reliance on third party service, GHB also

Gramax Health Bhd (GHB), a company operates in a health industry, is working in a project to develop a test kit that is able to determine the level of immunity a person has towards Covid- 19 based on his or her antibodies with higher accuracy rate compared with other similar test kits that are available in the market. In a recent business combination, GHB acquires a research and development (R&D) project of Vital Life Bhd (VLB) to develop a similar test kit with the one it develops. GHB does not intend to complete the project that had been acquired as it would compete with its own project. Its main intention to acquire the project is to prevent its competitors from obtaining access to the technology. Meanwhile, as part of its effort to fund its R&D projects, on 31 December 2019 GHB issued at par in a private placement a RM3 million 5-year fixed rate bond with an annual 10% interest coupon rate. On 31 December 2020, GHB's credit spread has deteriorated due to a change in its non-performance risk If the bond was issued on 31 December 2020, the instrument would need to have an interest rate of 11%. In reducing its reliance on third party service, GHB also

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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