=+Issue 4 On 1 January 2008, HOOD issued four million €1 bonds at par, redeemable on 31 December 2016 at €2 per €1 bond. No interest is payable during the nine years from 1 January 2008 to 31 December 2016. The implicit rate of interest in the bond is 8%. Bond holders can elect to convert their bond holdings on 31 December 2016 into €1 ordinary shares on the basis of one €1 ordinary share for every one €1 bond held. The market price of each €1 ordinary share in HOOD was €1.50 on 1 January 2008 and the share price is expected to increase by approximately 10 cent per annum. Requirement Prepare a memorandum that explains how the above issues should be accounted for in the financial statements of HOOD for the year ended 31 December 2008.