Question
On January 1, 2019, 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
On January 1, 2019, 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
Question: Under IFRS, how would you treat this transaction? Has it been accounted for correctly?
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Cornerstones of Managerial Accounting
Authors: Maryanne M. Mowen, Don Hanson, Dan L. Heitger, David McConomy, Jeffrey Pittman
2nd Canadian edition
978-0176721237, 978-0176530884
