ABC Corporation issued an $400,000, 4%, three-year bond for $410,000. The bond pays interest annually, at each year-end. At maturity, the bond can be repaid in cash or converted to 30,000 common shares at the investor's option. The market interest rate for bonds of similar terms and risk, but that are not convertible, is in the range of 6%.

1 - Calculate the portion of the bond to be recorded as a liability.

2 - Provide the entry to record issuance of the bond.