Required: Financial Assets can be either classified as an equity instrument or a debt instrument. Explain the classification of financial asset in Mentari Bhd with reference to the MFRS 9 Financial Instrument. a. b. Prepare the journal entries to record the acquisition, the change in fair value and the disposal of the shares for Mentari Bhd.
Required: Financial Assets can be either classified as an equity instrument or a debt instrument. Explain the classification of financial asset in Mentari Bhd with reference to the MFRS 9 Financial Instrument. a. b. Prepare the journal entries to record the acquisition, the change in fair value and the disposal of the shares for Mentari Bhd.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:QUESTION 4
On 1 January 2020, Mentari Bhd acquired 15% out of the 1 million units of the ordinary
shares of Persada Bhd at RM40 per shares. The transaction costs incurred on the
share acquisition was RM2 per share. These shares were classified as fair value
through profit or loss.
A.
On 1 March 2020, the entity acquired another investment in Chenta, Bhd for RM10
million and incurred RM500,000 commission costs. These shares were classified as
fair value through other comprehensive income.
As of 30 June 2020, the market value of the investments in Persada Bhd and Chenta
Bhd were RM7.2 million and RM12 million respectively. On 31 October 2020, the
investment in Persada Bhd was sold for RM7.5 million.
Required:
Financial Assets can be either classified as an equity instrument or a debt
instrument. Explain the classification of financial asset in Mentari Bhd with
reference to the MFRS 9 Financial Instrument.
a.
b.
Prepare the journal entries to record the acquisition, the change in fair value and
the disposal of the shares for Mentari Bhd.
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