Question:ABC sold $350,000 of 5% (annual interest payments) convertible 5 year bonds at par. The market interest rate on the sale date was 7%. Each $1,000 bond was convertible into 20 shares of KER Ltd. no-par value common shares on any interest date after the end of the first year from the date of issuance.

Required:

Using IFRS, prepare the journal entry at issuance using the proportional method. Assume that the option pricing model placed a value of $73,675 for the conversion feature.Hint: pv,5,0.07 is .71299;pva,5,0.07 is 4.10020