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In: Accounting
Jabieb corporation issued 3,000 convertible bonds on January 1, 2018. The bonds have a 3-year life...
- Jabieb corporation issued 3,000 convertible bonds on January 1, 2018. The bonds have a 3-year life and are issued at par with a face value of $1,000 per bond, giving total proceedings of $3,000,000. Interest is payable annually at 6%. Each bond is convertible into 200 ordinary shares (par value $1). The market rate of interest on similar non-convertible debt is 8%.
a)Compute the liability and equity component of the convertible bond on January 1, 2018.
b) Assume the bond is converted on January 1, 2019, compute the carrying value of the bond payable on
January 1 2019.
b) Prepare the journal entry to record the conversion on January 1, 2019. .
c) Assume that the bonds were repurchased on January 1, 2019 for $2,900,000 cash instead of being
converted. The net present value of the bonds on January 1, 2019 is $2,850,000. Prepare the journal entry
to show the repurchase on January 1, 2019.
Solutions
ekkarill92 answered 2 days agoRelated Solutions
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convertible into 200 ordinary shares (par value $1). The market
rate of interest on similar non-convertible debt is 8%
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