On January 1, 2020, MacGregor Ltd. issued 1,000 five-year, 10% convertible bonds at par of $1,000, with
Question:
On January 1, 2020, 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. Similar straight bonds carry an interest rate of 12%.
(a) Calculate the PV of the debt component by itself. Show calculations using any of the following methods: (1) factor tables, (2) a financial calculator, or (3) Excel function PV.
(b) How should MacGregor record the issuance if it follows IFRS? Use the amount you arrived at in part (a) using a financial calculator or Excel, rounded to the nearest dollar.
(c) How should MacGregor record the issuance if it follows ASPE?
Step by Step Answer:
a 1 Using Tables The PV of the Using Table A4 PV of an ordinary annuity of the interest payments of ...View the full answer
Intermediate Accounting Volume 2
ISBN: 9781119497042
12th Canadian Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
