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Pass H31-341 Exam Cram

Exam Code: H31-341

Exam Name: HCIP-Transmission V2.0

Version: V15.35

Q & A: 208 Questions and Answers

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NEW QUESTION: 1
Which of the following is the BEST source for identifying key control indicators (KCIs)?
A. A list of critical security processes
B. Privileged user activity monitoring controls
C. Controls mapped to organizational risk scenarios
D. Recent audit findings of control weaknesses
Answer: C

NEW QUESTION: 2
On the first day of the current fiscal year, an entity issued 1.000 bonds, each of which is convertible into 199 ordinary shares of the issuer. The face amount of each bond is US $1.000, the nominal annual interest rates 7%, and the market annual interest rate for similar on convertible debt is 9%. Interest is payable at the end of each year of the bonds' 5-year term. The present values of 1 for 5 periods at 7% and 9% are .71 3 and respectively. The present values of an ordinary annuity of 1 for 5 periods at 7% and 9% are
4.100 and respectively. The fair value of the bonds' equity component is not determinable. What is the entry for the recognition of the convertible bonds?

A. Option D
B. Option B
C. Option A
D. Option C
Answer: B
Explanation:
The initial total carrying amount of convertible debt or of debt instruments issued with detachable share purchase warrants should be allocated between the debt instruments and the equity feature, and these debt and equity components should be separately accounted for. The total assigned initially to the instrument as a whole equals the fair value of the consideration received. However, the IFRSs do not stipulate a method for making the allocation. One approach is to assign to the less easily measurable component a residual amount after determining the amount of the more readily measurable component. For example. the future payments on the financial liability might be discounted at the market rate for a similar instrument without an equity feature. This amount would then be subtracted from the amount of the compound instrument as whole to determine the carrying amount of the equity feature. This method is appropriate when the fair value of the equity feature is not determinable. Thus, the present value of the principal repayment discounted at the market rate of 9% is US $650,000$1.000.000 $ _650), the present value of the interest payments discounted at 9 7 is US $272.300 [($1.000.000 $ 07) $ 3.890]. and their total is US $922,300. The residual amount assignable to the equity feature is therefore US $77,700 [(1 .000 bonds x $1 .000 par) proceeds -$922,300 assigned to the debt component], which is also the bond discount given that the convertible bonds were issued at par.

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