Entity B issues 5,000 convertible bonds at par with a face value of $1,000 per bond on January 31, 202x. The bond is measured at amortized cost. The fair value of the similar bond without conversion option has a fair value $900 per bond.

Required:

If each bond can be convertible at the bond holders discretion, at any time up to maturity into 100 ordinary shares, what type of instrument is it? What is the journal entry on January 31, 202x? How do we account for each component subsequently?

If each bond can be convertible at the bond holders discretion, at any time up to maturity into the variable number of shares determined by the Entity Bs stock price at the conversion date, what type of instrument is it? What are the journal entries on January 31, 202x? How do we account for each component subsequently?