Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please help (a) Vedika Ltd. issued 80,000 8% convertible debentures of 100 each on 14 April, 2015. The debentures are due for redemption on 31st
please help
(a) Vedika Ltd. issued 80,000 8% convertible debentures of 100 each on 14 April, 2015. The debentures are due for redemption on 31st March, 2019 at a premium of 20%, convertible into equity shares to the extent of 50% and balance to be settled in cash to the debenture holders. The interest rate on equivalent debentures without conversion right was 12%. The conversion to equity qualifies as fixed for fixed. You are required to separate the debt and equity components at the time of issue and show the accounting entries in Vedika Ltd.'s books at initial recognition only. The following present values of Rupee 1 at 8% and 12% are provided for a period of 5 years. Interest rate Year 1 Year 2 Year 3 Year 4 Years 5 8% 0.923 0.853 0.789 0.731 0.677 12% 0.887 0.788 0.701 0.625 0.557Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started