Case Study Report - North American Gold And Silver

Question: Case Study Report: North American Gold And Silver. Answer: Directors report: To: board of directors of North American Gold and Silver (NAGS) From: Jack Gerikyan Re: Report regarding the discussion of recognition, measurement and presentation of financial instrument issued: Date: 31st December 2014 Background: The North American Gold and Silver presents a complete set of financial statements, which consists of information regarding the issue of various financial statements for the financial year of 2014. North American Gold and Silver present its report in the reporting period, which discloses the period covered in the issue of the financial statement; The purpose of using such longer period, and The fact that the amount presented in the financial statement regarding the issue of such instruments are not comparative. Fair presentation and in accordance with the IFRS. The financial statement issued by North American Gold and Silver presents a true and fair view of the financial statement of the financial performance of the business entity. The application of IFRS discloses the additional information regarding the issue of such financial instrument and achieves a fair presentation of the report to the board of directors of the North American Gold and Silver. Going Concern: The report is prepare with the view of keeping in mind that the board of directors is presented with the review assuming the North American Gold and Silver is going concern and will continue to exists in operation for the foreseeable course of future. Consistency of presentation: The report is consists of presentations and classification of items in the financial instruments which is issued during the financial year of 2014 unless a further change is justified in circumstances or a requirement of a new IFRS. Material changes and commitments: The report also defines that any materiality changes and commitments which affects the financial position of the North American Gold and Silver which have incurred during the course of end of financial year to the financial statement which is related to the financial statement of the report. Reporting period of Report: The reporting period of the report is in accordance with the financial statement which will be prepared for a minimum period of at least one financial year. This discloses the amount of the capital and the reason for such changes is stated in the report, which is due to be presented to the board of directors. List of line items: The list of line items concerning the directors report demonstrates the face of the financial position, which are as follows. Cash Long term bonds consisting of 10 years Additional paid up share capital Debts Convertible bonds Equity share capital 6% foreign convertible bonds. Convertible bonds Preference share capital 8% preference share capital 5% preference shares Share capital Issue of long-term bonds: The report contains the information that at the beginning of the financial year the company issues long-term bonds for a period of tern years worth $500,000. It also facilitates the holder of the bond to convert it for cash depending upon the financial performance of the company. The draft of the financial instrument issued states the net income of $250,000 Issue of shares: The report discloses to the board of directors that equity shares worth $200,000 issued which can be converted in to convertible bonds carrying 6% interest rate. Issue of preference shares: The Board of directors is presented with the report that regarding the issue of preference shares, which are non-cumulative in nature, valued $100 per share, which is retractable from the financial year of September 1st 2014, and presents with the option of redemption in the following year. Issue of convertible bonds: During the financial year 1st January 2014 North American Gold and Silver issued $1.5 million of zero based interest rate bearing bonds along with the share warrants offering the opportunity to the share holder to purchase the $1.25 million of common equity shares at $10 per share. North American Gold and Silver also received a revenue of $1.9 million for the issue of notes and share warrants. The share warrants, which were valued at $550,000, based on the foundation of option pricing model. Issue of cumulative dividend: During 1st March 2014 North American Gold and Silver issued 50,000 preference share of $10 each valued 500,000 with the cumulative dividend rate of 5%. However, those preference shares are cumulative and can be redeemed but they are not retractable. The organisation provides the option of converting the preference shares into common shares during any time of the current financial year at a ratio of 1:1 Issue of common shares: During the financial year of 2014 200,000 common shares of $5 per shares having a worth of $10,00,000 were issued. Dividends: In addition to the information disclosed in the report the information contained regarding the issue of such instrument regarding the dividend The amount of dividend proposed or declared before the issue of such financial instruments are authorised for such issue but it not declared for distribution to the owners for any such period of the current financial year. The amount of cumulative preference share is recognised based on number of shares issued. Recommendations: The board of directors on receiving this report for information approves for negotiation of convertible bonds for long term basis carrying the interest rate of 10%. The board of directors on the other hand approves that the equity shares be redeemed after a period of five years on the parameters as indicated in this report. In weighting this factor is has been considered that these financial instrument be issued prior on the approval of Board of Directors. Notes on the issue of financial instruments: The current information about the basis of issue of financial instruments is prepared in accordance with the policies and procedures The report disclose any information which is required by the IFRS which is not presented elsewhere in the financial statement The report also represents the additional set of information that which is not disclosed elsewhere in the report presented to the board of directors but it is relevant in the understanding of issue of any such financial instrument. Date Particulars Amount ($) Amount ($) Dr. Cr. 30-06-15 Cash A/c Dr 500000 To 10 Yrs Bond A/c. 500000 Cash A/c. Dr 1900000 To Additional Paid up Capital A/c. 362595 To Debt A/c 1537405 Cash A/c. Dr 1500000 To 6% Convertible Bonds A/c 1500000 6% Convertible Bonds A/c Dr 200000 To Equity Shares A/c. 200000 Cash A/c Dr 1500000 To 8% Preference Share A/c. 1500000 8% Preference Shares A/c. Dr 157500 To Cash A/c. 157500 Cash A/c Dr 500000 To 5% Preference Share A/c. 500000 Cash A/c Dr 1000000 To Equity Share A/c. 1000000 Reference List Ahrens, Thomas, Bino Catass, and Gustav Johed. "Interactional expertise and contributory accounting expertise on the board of directors."Critical Perspectives on Accounting, Toronto(2014). Ittner, Christopher D., and Thomas Keusch. "The Influence of Board of Directors Risk Oversight on Risk Management Maturity and Firm Risk-Taking." (2015).