JKL measure gearing as debt:equity, based on book values.

CIMA F2 Question Answer

JKL measure gearing as debt:equity, based on book values. At 31 December 20X5 the ratio is 2:3 and JKL would like this to be 2:5.

Which of the following transactions individually would achieve this?

Bonus issue from the share premium account.

Revaluation of investment property to an increased fair value.

Repayment of a 6 year term loan with the issue of 5 year redeemable debentures.

Issue of redeemable preference shares at par.

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