Racquet Ltd issued $20 million of convertible notes on 1 July 2013. The notes have a life of 6 years and a face value of $20 each. Annual interest of 5% is payable at the end of each year. The notes were issued at their face value and can be converted at any time over their lives. Organisations with a similar risk profile to Racquet Ltd have issued debt with similar terms but without the option to convert at the rate of 7%. What are the appropriate accounting entries to record the conversion of the notes to equity on 1 July 2014 (after interest has been paid and recorded)? Dr Convertible loan liability 18 359 921 Dr Option to convert notes to equity 1 906 616 Cr Share capital 20 266 537 Dr Convertible loan liability 18 093 384 Dr Option to convert notes to equity 1 906 616 Cr Share capital 20 000 000 Dr Convertible loan liability 18 359 921 Dr Option to convert notes to equity 1 906 616 Cr Gain on convertible options 266 537 Cr Share capital 20 000 000 Dr Convertible notes 20 000 000 Cr Share capital 20 000 000