HSBC issued £5,000,000 of loan stock at par on 1st January 2019. The nominal  annual interest rate of 6%. Interest is payable in on 31 December each year and  the loan stock has a three-year term. Each £4,000 loan stock can be converted  at any time up to maturity for 1200 of £1 ordinary shares. If the conversion option  is not taken up, they will be redeemed at par. The prevailing market interest rate  for similar debt without conversion options is 9%. The company prepares  financial statement to 31 December each year.

Required:
i. Calculate the separate components of the financial instrument on initial  recognition;
ii. Prepare an amortised cost table for the life of the financial liability;
iii. Prepare the ledger account for the financial liability;
iv. Prepare the relevant financial statement extracts for years 2019, and  2020;
v. Prepare the accounting entries on redemption if (a) the conversion is  taken up; (b) the conversion option is not taken up.