B. On 1 January 2017 Billion Bhd issued convertible bonds with a total proceed of RM3 million. The bond has a coupon interest rate 6% which are payable annually at 31 December each year. The bond is convertible at any time up to maturity into 200,000 ordinary shares. The prevailing market interest rate for similar debts without conversion option at the time of bond issued was 9%. At the issuance date, the market price of one ordinary share was RM5.00. The present value of RM1 interest at 6% and 9% related to the bond is as follow: Year 6% 9% 2017 0.943 0.917 2018 0.890 0.842 2018 0.840 0.772 2020 0.792 0.708 Required: a. Calculate the equity component of the convertible bonds at its initial recognition. (8 marks) b. On 1 January 2020, Billion Bhd ordered goods for sale amounting to RM500,000 from Outrange Bhd. The goods were delivered and received by Billion Bhd on 1 February 2020. This amount is to be settled within 60 days. Discuss whether there is a contract that create financial instrument between Billion Bhd and Outrange Bhd as at 1 January 2020 (2 marks)