Refer to BE16-12. Assume that Bantry Capital Ltd. follows IFRS and recorded the issuance of the bonds and warrants accordingly. On a date when the bonds had a carrying value of $489,100, Bantry paid $14,000 to the bond holders to induce early conversion. Record the conversion using the book value method.

Data From BE16-12:

Saver Rio Ltd. purchased options to acquire 1,000 common shares of Spender Limited for $20 per share within the next six months. The premium (cost) related to the options was $500. How should this be accounted for in the financial statements of Saver Rio? Explain which financial risks the transaction exposes the entity to.