Section B - Case 3: PayStream (Question 1 of 5)
Scenario: PayStream, a FinTech firm whose functional currency is the Dinar (D), issued 10,000 convertible bonds on 1 January 20X5 at their par value of D100 each. The bonds pay a 4% coupon annually in arrears and mature in 3 years. Similar bonds without a conversion option carry an interest rate of 7%. (PV of $1 at 7% for 3 yrs = 0.8163; PV of $1 annuity at 7% for 3 yrs = 2.6243).
On 1 July 20X5, PayStream bought 50,000 shares in DataCo for D3 each, irrevocably designating them at Fair Value Through OCI (FVTOCI). At 31 December 20X5, the shares traded at D3.50.
On 1 November 20X5, PayStream bought servers from a US supplier for $100,000 USD. Exchange rates: 1 Nov: $1 = D0.80; 31 Dec: $1 = D0.85. The invoice is unpaid at year-end.
Question: What is the value of the liability component of the convertible bonds on initial recognition at 1 January 20X5?
ACCA · Question 30 · The Effects of Changes in Foreign Exchange Rates
Section B - Case 3: PayStream (Question 5 of 5)
Scenario: PayStream, a FinTech firm whose functional currency is the Dinar (D), issued 10,000 convertible bonds on 1 January 20X5 at their par value of D100 each. The bonds pay a 4% coupon annually in arrears and mature in 3 years. Similar bonds without a conversion option carry an interest rate of 7%. (PV of $1 at 7% for 3 yrs = 0.8163; PV of $1 annuity at 7% for 3 yrs = 2.6243).
On 1 July 20X5, PayStream bought 50,000 shares in DataCo for D3 each, irrevocably designating them at Fair Value Through OCI (FVTOCI). At 31 December 20X5, the shares traded at D3.50.
On 1 November 20X5, PayStream bought servers from a US supplier for $100,000 USD. Exchange rates: 1 Nov: $1 = D0.80; 31 Dec: $1 = D0.85. The invoice is unpaid at year-end.
Question: What is the foreign exchange gain or loss to be recognized in profit or loss regarding the US supplier payable for the year ended 31 December 20X5?
Answer options:
A gain of D5,000
A loss of D5,000
A loss of D5,882
Nil, as the invoice is unpaid
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