a) Skypark plc issued 5,000,000 of 4% convertible bond at par on 1st January 2018. Interest is payable in on 31 December each year and the bond has a three-year term. Each 4,000 bond can be converted at any time up to maturity for 1,000 of 1 ordinary shares. If the conversion option is not taken up, they will be redeemed at par. The prevailing market interest rate for similar debt without conversion options is 6%. The company prepares financial statement to 31 December each year. Required: Calculate the separate components of the financial instrument on initial recognition; (5 marks) Prepare an amortised cost table for the life of the financial liability: (5 marks) Prepare the relevant financial statement extracts for years 2018 and 2019; (10 marks) Prepare the accounting entries on redemption if (a) the conversion is taken up: (b) the conversion option is not taken up