Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Daisy Inc. issued $6.6 million of 10year, 9%, convertible bonds on June 1, 2014, at 96 plus accrued interest. The bonds were dated April 1,

Daisy Inc. issued $6.6 million of 10year, 9%, convertible bonds on June 1, 2014, at 96 plus accrued interest. The bonds were dated April 1, 2014, with interest payable April 1 and October 1. Bond discount is amortized semiannually. Bonds without conversion privileges would have sold at 95 plus accrued interest. On April 1, 2015, $1.65 million of these bonds were converted into 34,375 common shares. Accrued interest was paid in cash at the time of conversion but only to the bondholders whose bonds were being converted. Assume that the company follows IFRS. Instructions (a) Prepare the entry to record the issuance of the convertible bonds on June 1, 2014. (b) Prepare the entry to record the interest expense at October 1, 2014. Assume that accrued interest payable was credited when the bonds were issued. (Round to nearest dollar.) (c) Prepare the entry(ies) to record the conversion on April 1, 2015. (The book value method is used.) Assume that the entry to record amortization of the bond discount using the straight-line method and interest payment has been made. (d) What do you believe was the likely market value of the common shares as of the date of the conversion of April 1, 2015

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Accounting In A Dynamic Environment

Authors: Cheryl S McWatters, Jerold L Zimmerman

1st Edition

0415839025, 9780415839020

More Books

Students also viewed these Accounting questions

Question

=+b) Is this model appropriate for this series? Explain.

Answered: 1 week ago

Question

5. Give examples of binary thinking.

Answered: 1 week ago