Question
Question from: Chapters 15 of Beechy, Conrod and Farrell, Intermediate Accounting II, 7th. edition A1513ConvertibleDebtMandatoryConversion: TwixtCorp.issued$5,000,000ofconvertiblebondson1Januaryfor$4,790,000cash.Thebondhadthe followingterms: Bondsmatureinfiveyears'time. Annualinterest,5%,ispaideach31December. Bondsareconvertibleto400,000commonsharesatmaturityorcanberepaidincash.Thischoiceisupto TwixtCorp. Currentmarketinterestratesare6%. Required: 1.Assignavaluetotheliabilityandtheequityportionsofthebond. 2.Providethejournalentrytorecordissuanceofthebond.
Question from: Chapters 15 of Beechy, Conrod and Farrell, Intermediate Accounting II, 7th. edition
A1513ConvertibleDebtMandatoryConversion:
TwixtCorp.issued$5,000,000ofconvertiblebondson1Januaryfor$4,790,000cash.Thebondhadthe followingterms: Bondsmatureinfiveyears'time. Annualinterest,5%,ispaideach31December. Bondsareconvertibleto400,000commonsharesatmaturityorcanberepaidincash.Thischoiceisupto TwixtCorp. Currentmarketinterestratesare6%.
Required:
1.Assignavaluetotheliabilityandtheequityportionsofthebond.
2.Providethejournalentrytorecordissuanceofthebond.
3.Provideascheduletoshowinterestexpenseandamortizationoftheliabilityoverthelifeofthebond. 4.Whatfinancialstatementelementswouldbechangedwhencommonsharesareissuedatmaturity?
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Mathematical Applications for the Management Life and Social Sciences
Authors: Ronald J. Harshbarger, James J. Reynolds
11th edition
9781337032247, 9781305465183, 1305108043, 1337032247, 1305465180, 978-1305108042
