Consider the following events for Rewa Ltd.

1. purchased two parcels of land (Block A and Block B) for $2,450,000 each on 1 July 2018. Subsequent to initial measurement, revalued the land. Fair values are as follows:

Parcel of land	Fair value 30 June 2019	Fair value 30 June 2020
Block A	$2,205,000	$1,960,000
Block B	$3,040,000	$2,650,000

2. on 1 July 2020 Rewa Ltd issues $11 million of convertible bonds to Ra Ltd. The bonds have a life of eight years, a face value of $8.00 each, and they offer interest, payable at the end of each financial year, at a rate of 9 per cent per annum. The bonds are issued at their face value and each bond can be converted into two ordinary shares in Rewa Ltd at any time in the next seven years. Organizations of a similar risk profile have recently issued debt with similar terms, but without the option for conversion. The market requires a rate of return of 11 per cent per annum on such securities. It is considered that investors in Rewa Ltd are prepared to take a lower return (9 per cent) as a result of the facility to convert the bonds to equity.

REQUIRED:

1. a). Prepare journal entries to record the revaluations of land on 30 June 2019 and 30 June 2020. 
2. b). Provide the journal entries to account for:

1. the issue of the above securities 
2. the payment of the first year’s interest, 

c. the conversion of the securities to equity, assuming that the conversion takes place two years after the bonds are issued.