On January 1, 2017, MacGregor Ltd. issued 1,000 five-year, 10% convertible bonds at par of $1,000, with

Question:

On January 1, 2017, MacGregor Ltd. issued 1,000 five-year, 10% convertible bonds at par of $1,000, with interest payable each December 31. Each bond is convertible into 100 common shares, and the current fair value of each common share is $6 per share. Similar straight bonds carry an interest rate of 12%.
(a) Calculate the PV of the debt component by itself.
(b) How should MacGregor record the issuance if it follows IFRS?
(c) How should MacGregor record the issuance if it follows ASPE?