Q6. Fortune Cookie Inc. (FCI) issued $10 million of 10-year, 5% convertible bonds on April 1, Year 5 at 102.5 Coupons are payable on April 1 and October 1. Bonds without conversion privileges would have sold at 101.5. FCIs fiscal year-end is December 31. Please assume that FCI follows IFRS.

(1) On October 1, Year 10, 30% of these bonds were converted to common

shares right after the payment of interest. Determine the amount to be assigned to common shares at the time of conversion. [7 marks]

(2) On December 31, Year 10, additional 30% of these bonds were converted

to common shares. Accrued interest was paid at the time of conversion. Determine the amount to be assigned to common shares at the time of conversion. [9 marks]