Question
On January 1, 2020, Sro Company issued ten convertible bonds with a par value of $8,000 per bond in market for $82,000 in total. Each
On January 1, 2020, Sro Company issued ten convertible bonds with a par value of $8,000 per bond in market for $82,000 in total. Each bond is convertible into 800 ordinary shares of $3 per ordinary share par value. The bonds have a four-year life and a stated interest rate of 8% payable annually. The market interest rate for similar non-convertible bonds on January 1, 2020, is 9%.
Q : Compute fair value of liability component and fair value of equity component, rounded to the nearest dollar, and prepare the journal entry. In the computations, show the figures of present value factors and round to the fifth decimal point.
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