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Question 2 a) Sampah Limited issued a GHS5,000,000 18% convertible loan note at par on 1 January 2020 with interest payable annually in arrears. Three years later, on 31 December 2022, the loan note becomes convertible into cquity shares on the basis of GHS100 of loan note for 50 equity shares or it may be redeemed at par in cash at the option of the loan note holder. The financial accountant of the company has observed that the use of a convertible loan note was preferable to a non-convertible loan note as the latter would have required an interest rate of 24% in order to make it attractive to investors. Required: In accordance with IFRS 9: Financial Instruments, show how the convertible loan note should be accounted for in Sumpah Lid's income statement for the year ended 31 December 2020 and statement of financial position as at 31 December 2020. Pass journals to record entries at the end of 2022 assuming A) The share option is taken (5 marion) (2 marks) Page 3 of 5

B) The loan is repaid (2 marks) carty a coupon rate of 5% and are redeemable in 3 yeus a tice value, b) On January 2020, Sampah Issued 10,000 bond instruments with a face value of GHS100 at a market price of GHISOS Bond brokers charged foes totaling GHS18,000 in relation to the bond issue. The bonds Sampah Lid wishes to account for the bonds using IFRS 9. Financial Instruments amortised cost method However, there was some confusion about how the bonds should be accounted for. Currently, the cash received from the bond issue of GHS950,000 has been recognized as a non-current liability. The broker GHS50,000 has been expensed in arriving at profit before tax and the effective rate of interest is 7.62% fres of CHS18,000 were deducted from the non-current liability carrying amount, the coupon payment of Required: transaction relating to Sampah Lid for the year ended 31 December 2020, In accordance with IFRS 9: Financial Instruments, show the necessary accounting treatment of the above (6 marks)