On January 1, 2014, Al Maha Company issued a convertible bond with a par value of...
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On January 1, 2014, Al Maha Company issued a convertible bond with a par value of $100,000 for $120,000. The bonds are convertible into 13,000 ordinary shares of $1 per share par value. The bond has a 5-year life and has a stated interest rate of 10% payable annually. The market interest rate for a similar non-convertible bond at January 1, 2014, is 8%. On December 31, 2017, the bonds were converted in full. On that date the fair value of the liability component was $106,000. Required For Al Maha Company: a) Prepare the journal entry to record the issuance of the convertible bond on January 1, 2014. TEOR SHARE b) Prepare the journal entry to record the conversion on December 31, 2017. Assume that the accrual of interest related to 2017 has been recorded. c) Assume that the convertible bonds were repurchased on January 01, 2015, for $115,000 instead of being converted. Assume, further, that the liability component of the bond was valued at $108,000 on January 01, 2015. Prepare the Journal entry to record the repurchase of the bond on January 01, On January 1, 2014, Al Maha Company issued a convertible bond with a par value of $100,000 for $120,000. The bonds are convertible into 13,000 ordinary shares of $1 per share par value. The bond has a 5-year life and has a stated interest rate of 10% payable annually. The market interest rate for a similar non-convertible bond at January 1, 2014, is 8%. On December 31, 2017, the bonds were converted in full. On that date the fair value of the liability component was $106,000. Required For Al Maha Company: a) Prepare the journal entry to record the issuance of the convertible bond on January 1, 2014. TEOR SHARE b) Prepare the journal entry to record the conversion on December 31, 2017. Assume that the accrual of interest related to 2017 has been recorded. c) Assume that the convertible bonds were repurchased on January 01, 2015, for $115,000 instead of being converted. Assume, further, that the liability component of the bond was valued at $108,000 on January 01, 2015. Prepare the Journal entry to record the repurchase of the bond on January 01,
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Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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