Long-Term Debt

At the beginning of the year, the company refinanced its long-term debt and related-party debt (of $123,039,000 each) for a new debt issuance with a face value of $300,000,000, coupon rate of 5% (paid annually), and 10-year maturity. The bond yields a market rate of 4.6771% (2% risk-free rate plus a 2.6771% risk premium) and has been recorded at $307,598,000.

The bond offers holders the right to convert $150 in bond face value into a common share. Currently, the company's common shares were trading at $165. If not for the conversion feature, the bonds would have likely traded at par at the time of issuance. The first bond payment will be made on January 1, 2021. Interest has been accrued and recorded in the interest expense line item.

Question

• Analysis for the financial accounting issues (eg. Provide the relevant GAAP criteria and support the analysis with case facts)
• Recommendation based on GAAP supported/ case specific analysis
• Exhibit that adjusts the relevant Financial Statement figures based on your recommendations
• Outline any differences between IFRS + ASPE for the issues discussed and discuss if the analysis would be the same or different under the other framework (eg - if your case analysis used ASPE, what would the IFRS GAAP differences, if any, AND would the analysis be the same or different under IFRS)