On March 1, 2020, Pharoah Corporation issued $500,000 of 9% non-convertible bonds at 105, which are due on February 28, 2040. In addition, each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase one of Pharoah's no par value common shares for $50. The bonds without the warrants would normally sell at 93 Pharoah prepares its financial statements in accordance with IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Cash Bonds Payable Contributed Supplies - Stock Warrants e Textbook and Media Your answer is partially correct Sheffield Corp. issued $10,000,000 of par value, 10% convertible bonds at 98. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 91. Sheffield Corp has adopted ASPE and would like to RE 3 ps Impre 110 home bur DM end 650 8 FB A & 5 7 6 8 5 2 9 3 0 VA R T T Y U P 9 con Il 11 Sheffield Corp. issued $10,000,000 of par value, 10% convertible bonds at 98. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 91. Sheffield Corp. has adopted ASPE, and would like to explore all options available to report the convertible bond. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Account Titles and Explanation Debit Credit Option 1: Residual Method Cash Bonds Payable Contributed Surplus - Conversion Rights Option 2: Value Equity component at zero Cash Bonds Payable e Textbook and Media Shamrock Limited issued $38,000,000 of par value, 8% bonds at 99. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $5. Shamrock Limited has adopted ASPE. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Account Titles and Explanation Debit Credit Option 1: Residual Method Cash Bonds Payable Contributed Surplus - Stock Warrants Option 2: Value Equity.component at zero Cash Bonds Payable e Textbook and Media - On July 1, 2020. Tien Limited called its 10% convertible bonds for conversion. The $38,000,000 of par value bonds were converted into 3,800,000 common shares. On July 1, there was $75,000 of unamortized discount applicable to the bonds, and the company paid an additional $75,000 to the bondholders to induce conversion of all the bonds. At the time of conversion, the balance in the account Contributed Surplus --Conversion Rights was $250,000, and the bond's fair value (ignoring the conversion feature) was $37,955,000. The company records conversion using the book value method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually) a) IFRS: Account Titles and Explanation Debit Credit Los on Redemption of Bonds Bonds Payable Contributed Surplus Conversion Rights Common Shares Cash b) ASPE: Account Titles and Explanation Debit Credit b) ASPE: Account Titles and Explanation Retained Earnings Debit Credit Loss on Redemption of Bonds Bonds Payable Contributed Surplus Conversion Rights Common Shares Cash e Textbook and Media On December 1, 2020, Horton Company issued 400 of its $1.000,7% bonds at 103. Attached to each bond was one detachable stock warrant entitling the holder to purchase 10 of Horton's common shares. On December 1, 2020, the fair value of the bonds, without the stock warrants, was 95. Horton Company prepares its financial statements in accordance with IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Cash Bonds Payable Contributed Surplus Stock Warrants e Textbook and Media
