Question

do the report for Accounting for issuance of convertible securities

Answer 1

Answer:

• A convertible security is a debt instrument that gives the holder the right to convert it into a certain number of shares of the stock of the issuing entity. ... The fair value in this calculation is based on the fair values of the securities when a conversion inducement offer is accepted.

Or

• A convertible security is a security that can be converted into another security.
• Convertible securities may be convertible bonds or prefered stocks that pay regular interest and can be converted into shares of common stock.

For example: value of securities-using inducement

face amount =$1000

New conversion piece =$10 per share

No of share issue/up on convension = $1000/$10

                                                          = $100 shares

Let market price per common share = $30

Value of securities issued = 100*$30

                                           = $3000

Or

Eg:

• Value of securities and prison to inducement
• Face market = $1000
• Old conversion price = $20 per share
• No of share issue/up on conversion = $1000/$20
•                                                           = $50 shares
• Let market price per common share = $30
• Value of securities issued = 50*$30

                                           = $1500

By subtracting the value of the equity securities prior to the inducement price from the value of the securities inducing the inducement price are arrive at the following value of the incremental consideration.

i.e; $3000 value of securities with inducement-$1500 value of securities prior to the inducement.

$1500 fair value of incremental consideration.