Luxury Living Inc. (LLI) is a public company based in Toronto and reports under IFRS. LLI owns and operates a large portfolio of apartment buildings. Most of its buildings are located in the downtown cores of major Canadian cities. Its tenants tend to be highincome professionals who value the quality and prestige that LLI apartment buildings are known for. You, CPA, are the audit senior working on LLI's December 31, 2023, financial statement audit. It is now February 6, 2024. You expect it to be an interesting audit due to some major events that happened during the year, such as a convertible bond issuance and a new partnership with a furniture manufacturer.

Task #1 On January 1, 2023, LLI issued 10,000 10-year, 6% convertible bonds for total proceeds of $10,000,000. The bonds pay interest each December 31. Each $1,000 bond is convertible into 10 common shares at maturity at the option of the holder. Similar bonds without the conversion feature are sold to yield 8%. The bonds were recorded on January 1 with the following journal entry: DR Cash 10,000,000 CR Bonds payable 10,000,000

Analysis of the treatment of the convertible bond under IFRS and determine if it has been accounted for correctly.