Shares – NBC Institute

CR – Nov 2023 – L3 – SB – Q4 – Financial Instruments (IFRS 9)

Discuss IFRS 9 derecognition rules, trade receivables factoring, and FVTOCI investment strategy for Pelumi Limited.

Question

a. Derecognition of financial instruments is the removal of a previously recognised financial asset or liability from an entity’s statement of financial position.

Required:
Discuss the rules of IFRS 9 – Financial Instruments relating to the derecognition of a financial asset. (10 Marks)

b. Royal Business Limited (RBL) held a portfolio of trade receivables with a carrying amount of N40 million as of May 31, 2022. At that date, the entity entered into a factoring agreement with Hexlinks Bank Limited (HBL), whereby it transfers the receivables in exchange for N36 million in cash. Royal Business Limited has agreed to reimburse the factor (HBL) for any shortfall between the amount collected and N36 million. Once the receivables have been collected, any amount above N36 million, less interest on this amount, will be repaid to Royal Business Limited. Royal Business Limited has derecognised the receivables and charged N4 million as a loss to profit or loss.

Required:
Explain how the rules of derecognition of the financial assets will affect the portfolio of trade receivables in Royal Business Limited’s financial statements. (3 Marks)

c. During the year 2021, Pelumi Limited invested in 800,000 shares in an NGX quoted company. The shares were purchased at N4.54 per share. The broker collected a commission of 1% on the transaction. Pelumi Limited elected to measure their shares at fair value through other comprehensive income (FVTOCI). The quoted share price as of December 31, 2021, was N4.22 to N4.26. Pelumi Limited decided to adopt a ‘sale and buy back’ strategy for the shares to realise a tax loss and therefore sold the shares at the market price on December 31, 2021, and bought the same quantity back the following day. The market price did not change on January 1, 2022. The broker collected a 1% commission on both transactions.

Required:
Explain the IFRS 9 accounting treatment of the above shares in the financial statement of Pelumi Limited for the year ended December 31, 2021.
Note: Show relevant calculations. (7 Marks)

Answer

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Tags: Derecognition, Factoring Agreement, Fair Value, Financial instruments, FVTOCI, IFRS 9, Investment strategy, Shares, Tax Loss, Trade receivables
Level: Level 3

Topic: Financial Instruments (IAS 32, IFRS 9)
Series: NOV 2023

BL – Nov 2012 – L1 – SA – Q16 – Company Law

Identify the legal term for the transfer of shares after a shareholder’s death.

Question

When a shareholder dies, what is the legal term by which his shares are vested in another person?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Shares, Transmission of Shares
Level: Level 1

Topic: Company Law
Series: NOV 2012

FA – Nov 2012 – L1 – SB – Q37 – Regulatory Environment of Accounting

Define the offer of company shares to a select group of individuals.

Question

The offer of shares of a company to a group of selected persons is called?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Equity, Private placement, Shares
Level: Level 1

Topic: Regulatory Environment of Accounting
Series: NOV 2012

FA – Nov 2012 – L1 – SA – Q12 – Financial Statements Preparation

Identifying what is not found in the statement of changes in equity.

Question

Which of the following is NOT found in the Statement of Changes in Equity of a company?

A. Dividend paid to equity shareholders
B. Proceeds from an issue of ordinary shares
C. Proposed dividend
D. Profit for the year
E. Share premium on fresh issue of shares

Answer

Find Related Questions by Tags, levels, etc.

Tags: Dividend, Equity, Shares
Level: Level 1

Topic: Financial Statements Preparation
Series: NOV 2012

BMF – Nov 2014 – L1 – SA – Q7 – Basics of Business Finance and Financial Markets

Identifies the component not part of the financial structure of a firm.

Question

The financial structure of a firm is made up of the following components EXCEPT:

A. Ordinary shares
B. Preference shares
C. Debentures
D. Undistributed profits
E. Dividends

Answer

Find Related Questions by Tags, levels, etc.

Tags: Debentures, Financial structure, Shares, Undistributed Profits
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: NOV 2014

BL – May 2014 – L1 – SA – Q12 – Agency Law

Identifying the main types of securities issued by public limited companies.

Question

Company securities which public limited companies issue to raise capital for their operations are mainly shares and ____________.

Answer

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Tags: Public Companies, Securities, Shares
Level: Level 1

Topic: Agency Law
Series: MAY 2014

BL – Nov 2013 – L1 – SA – Q11 – Company Law

Examines restrictions on the transfer of share interests in a company.

Question

The right to transfer an interest in the share of a company can be limited by the

A. Memorandum of Association
B. Articles of Association
C. Policy Manual of the company
D. Company’s directors
E. Secretary of the company

Answer

Find Related Questions by Tags, levels, etc.

Tags: Articles of Association, Company Law, Multiple Choice, Shares
Level: Level 1

Topic: Company Law
Series: NOV 2013

FA – Nov 2013 – L1 – SA – Q22 – Elements of Financial Statements

Understanding the term for the face value of shares.

Question

The “face value” of the shares in limited companies is known as ____________.

Answer

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Tags: Company Capital, Face Value, Shares
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2013

SCS – March 2023 – L3 – Q6 – International financial management

Explains the financial reporting implications of debt exchange and compares investing in bonds versus shares

Question

LCH has invested GH¢1,000,000 in a 5-year Government of Ghana Bond with a coupon rate of 20%. As a result of the Government of Ghana DDE programme, LCH has no option but to exchange the old bond with the new bond.

Required:
a) Explain FIVE (5) financial reporting implications of the debt exchange on the financial statements of LCH as at 31 December 2022.
(10 marks)

b) Discuss FOUR (4) advantages and TWO (2) main disadvantages of investing in bonds rather than shares.
(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bonds, Debt Exchange, Financial Reporting, Investment, Shares
Level: Level 3

Topic: International financial management
Series: MAR 2023

BL – May 2022 – L1 – SA – Q11 – Company Law

Determine when a person to whom shares are transmitted is entitled to dividends.

Question

A person to whom shares have been transmitted is entitled to dividends on the shares only after
A. Registration as a member of the company
B. Death of the original shareholder
C. Proving of deceased shareholder’s Will
D. Applying for the dividends
E. Notifying the company of deceased’s death

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Law, Dividends, Shares
Level: Level 1

Topic: Company Law
Series: MAY 2022

CR – Nov 2023 – L3 – SB – Q4 – Financial Instruments (IFRS 9)

Discuss IFRS 9 derecognition rules, trade receivables factoring, and FVTOCI investment strategy for Pelumi Limited.

Question

a. Derecognition of financial instruments is the removal of a previously recognised financial asset or liability from an entity’s statement of financial position.

Required:
Discuss the rules of IFRS 9 – Financial Instruments relating to the derecognition of a financial asset. (10 Marks)

Required:
Explain how the rules of derecognition of the financial assets will affect the portfolio of trade receivables in Royal Business Limited’s financial statements. (3 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Derecognition, Factoring Agreement, Fair Value, Financial instruments, FVTOCI, IFRS 9, Investment strategy, Shares, Tax Loss, Trade receivables
Level: Level 3

Topic: Financial Instruments (IAS 32, IFRS 9)
Series: NOV 2023

BL – Nov 2012 – L1 – SA – Q16 – Company Law

Identify the legal term for the transfer of shares after a shareholder’s death.

Question

When a shareholder dies, what is the legal term by which his shares are vested in another person?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Shares, Transmission of Shares
Level: Level 1

Topic: Company Law
Series: NOV 2012

FA – Nov 2012 – L1 – SB – Q37 – Regulatory Environment of Accounting

Define the offer of company shares to a select group of individuals.

Question

The offer of shares of a company to a group of selected persons is called?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Equity, Private placement, Shares
Level: Level 1

Topic: Regulatory Environment of Accounting
Series: NOV 2012

FA – Nov 2012 – L1 – SA – Q12 – Financial Statements Preparation

Identifying what is not found in the statement of changes in equity.

Question

Which of the following is NOT found in the Statement of Changes in Equity of a company?

A. Dividend paid to equity shareholders
B. Proceeds from an issue of ordinary shares
C. Proposed dividend
D. Profit for the year
E. Share premium on fresh issue of shares

Answer

Find Related Questions by Tags, levels, etc.

Tags: Dividend, Equity, Shares
Level: Level 1

Topic: Financial Statements Preparation
Series: NOV 2012

BMF – Nov 2014 – L1 – SA – Q7 – Basics of Business Finance and Financial Markets

Identifies the component not part of the financial structure of a firm.

Question

The financial structure of a firm is made up of the following components EXCEPT:

A. Ordinary shares
B. Preference shares
C. Debentures
D. Undistributed profits
E. Dividends

Answer

Find Related Questions by Tags, levels, etc.

Tags: Debentures, Financial structure, Shares, Undistributed Profits
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: NOV 2014

BL – May 2014 – L1 – SA – Q12 – Agency Law

Identifying the main types of securities issued by public limited companies.

Question

Company securities which public limited companies issue to raise capital for their operations are mainly shares and ____________.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Public Companies, Securities, Shares
Level: Level 1

Topic: Agency Law
Series: MAY 2014

BL – Nov 2013 – L1 – SA – Q11 – Company Law

Examines restrictions on the transfer of share interests in a company.

Question

The right to transfer an interest in the share of a company can be limited by the

A. Memorandum of Association
B. Articles of Association
C. Policy Manual of the company
D. Company’s directors
E. Secretary of the company

Answer

Find Related Questions by Tags, levels, etc.

Tags: Articles of Association, Company Law, Multiple Choice, Shares
Level: Level 1

Topic: Company Law
Series: NOV 2013

FA – Nov 2013 – L1 – SA – Q22 – Elements of Financial Statements

Understanding the term for the face value of shares.

Question

The “face value” of the shares in limited companies is known as ____________.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Company Capital, Face Value, Shares
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2013

SCS – March 2023 – L3 – Q6 – International financial management

Explains the financial reporting implications of debt exchange and compares investing in bonds versus shares

Question

Required:
a) Explain FIVE (5) financial reporting implications of the debt exchange on the financial statements of LCH as at 31 December 2022.
(10 marks)

b) Discuss FOUR (4) advantages and TWO (2) main disadvantages of investing in bonds rather than shares.
(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bonds, Debt Exchange, Financial Reporting, Investment, Shares
Level: Level 3

Topic: International financial management
Series: MAR 2023

BL – May 2022 – L1 – SA – Q11 – Company Law

Determine when a person to whom shares are transmitted is entitled to dividends.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Law, Dividends, Shares
Level: Level 1

Topic: Company Law
Series: MAY 2022

Question Tag: Shares

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CR – Nov 2023 – L3 – SB – Q4 – Financial Instruments (IFRS 9)

Discuss IFRS 9 derecognition rules, trade receivables factoring, and FVTOCI investment strategy for Pelumi Limited.

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BL – Nov 2012 – L1 – SA – Q16 – Company Law

Identify the legal term for the transfer of shares after a shareholder’s death.

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FA – Nov 2012 – L1 – SB – Q37 – Regulatory Environment of Accounting

Define the offer of company shares to a select group of individuals.

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FA – Nov 2012 – L1 – SA – Q12 – Financial Statements Preparation

Identifying what is not found in the statement of changes in equity.

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BMF – Nov 2014 – L1 – SA – Q7 – Basics of Business Finance and Financial Markets

Identifies the component not part of the financial structure of a firm.

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BL – May 2014 – L1 – SA – Q12 – Agency Law

Identifying the main types of securities issued by public limited companies.

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BL – Nov 2013 – L1 – SA – Q11 – Company Law

Examines restrictions on the transfer of share interests in a company.

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FA – Nov 2013 – L1 – SA – Q22 – Elements of Financial Statements

Understanding the term for the face value of shares.

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SCS – March 2023 – L3 – Q6 – International financial management

Explains the financial reporting implications of debt exchange and compares investing in bonds versus shares

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BL – May 2022 – L1 – SA – Q11 – Company Law

Determine when a person to whom shares are transmitted is entitled to dividends.

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CR – Nov 2023 – L3 – SB – Q4 – Financial Instruments (IFRS 9)

Discuss IFRS 9 derecognition rules, trade receivables factoring, and FVTOCI investment strategy for Pelumi Limited.

You're reporting an error for "CR – Nov 2023 – L3 – SB – Q4 – Financial Instruments (IFRS 9)"

BL – Nov 2012 – L1 – SA – Q16 – Company Law

Identify the legal term for the transfer of shares after a shareholder’s death.

You're reporting an error for "BL – Nov 2012 – L1 – SA – Q16 – Company Law"

FA – Nov 2012 – L1 – SB – Q37 – Regulatory Environment of Accounting

Define the offer of company shares to a select group of individuals.

You're reporting an error for "FA – Nov 2012 – L1 – SB – Q37 – Regulatory Environment of Accounting"

FA – Nov 2012 – L1 – SA – Q12 – Financial Statements Preparation

Identifying what is not found in the statement of changes in equity.

You're reporting an error for "FA – Nov 2012 – L1 – SA – Q12 – Financial Statements Preparation"

BMF – Nov 2014 – L1 – SA – Q7 – Basics of Business Finance and Financial Markets

Identifies the component not part of the financial structure of a firm.

You're reporting an error for "BMF – Nov 2014 – L1 – SA – Q7 – Basics of Business Finance and Financial Markets"

BL – May 2014 – L1 – SA – Q12 – Agency Law

Identifying the main types of securities issued by public limited companies.

You're reporting an error for "BL – May 2014 – L1 – SA – Q12 – Agency Law"

BL – Nov 2013 – L1 – SA – Q11 – Company Law

Examines restrictions on the transfer of share interests in a company.

You're reporting an error for "BL – Nov 2013 – L1 – SA – Q11 – Company Law"

FA – Nov 2013 – L1 – SA – Q22 – Elements of Financial Statements

Understanding the term for the face value of shares.

You're reporting an error for "FA – Nov 2013 – L1 – SA – Q22 – Elements of Financial Statements"

SCS – March 2023 – L3 – Q6 – International financial management

Explains the financial reporting implications of debt exchange and compares investing in bonds versus shares

You're reporting an error for "SCS – March 2023 – L3 – Q6 – International financial management"

BL – May 2022 – L1 – SA – Q11 – Company Law

Determine when a person to whom shares are transmitted is entitled to dividends.

You're reporting an error for "BL – May 2022 – L1 – SA – Q11 – Company Law"

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