The construction of Western Sydney International (Nancy-Bird Walton) Airport is underway and on track to begin operations in 2026. The airport is a transformational infrastructure project that will generate economic activity, provide employment opportunities closer to home for people in the Western Sydney region, and meet Sydney's growing aviation needs. Invest Ltd acquired two blocks of land in 2019 near Badgerys Creek for future residential development, speculating an increase in land prices. Block X, cost $2,430,000, and Block Y, cost $3,695,000. Valuations of the blocks are undertaken by an independent valuer on 30 June 2021 and 30 June 2023. The assessed values are: 2021 valuation($) 2023 valuation($) Block X 2,232,500 3,089,500 Block Y 3,892,500 3,492,500 On 1 July 2023, issues $4 million in convertible bonds. They are issued at their face value and pay an interest rate of 4 per cent. The interest is paid at the end of each year. The bonds may be converted to ordinary shares in Invest Ltd at any time in the next three years. Organisations similar to Invest Ltd have recently issued similar debt instruments but without the option for conversion to ordinary shares. These instruments issued by the other entities offer interest at a rate of 6 per cent. On 1 July 2024, all the holders of the convertible notes decided to convert the bonds to shares in Invest Ltd. REQUIRED: 1. Assuming asset revaluations were undertaken for the land in both 2021 and 2023, provide the journal entries for both years. (4 Marks) 2. Provide journal entries to (a) record the issue of the securities on 1 July 2023, (b) recognise the interest payment on 30 June 2024 and (c) recognise the conversion of the bonds to ordinary shares on 1 July 2024. (3 Marks) The construction of Western Sydney International (Nancy-Bird Walton) Airport is underway and on track to begin operations in 2026. The airport is a transformational infrastructure project that will generate economic activity, provide employment opportunities closer to home for people in the Western Sydney region, and meet Sydney's growing aviation needs. Invest Ltd acquired two blocks of land in 2019 near Badgerys Creek for future residential development, speculating an increase in land prices. Block X, cost $2,430,000, and Block Y, cost $3,695,000. Valuations of the blocks are undertaken by an independent valuer on 30 June 2021 and 30 June 2023. The assessed values are: 2021 valuation($) 2023 valuation($) Block X 2,232,500 3,089,500 Block Y 3,892,500 3,492,500 On 1 July 2023, issues $4 million in convertible bonds. They are issued at their face value and pay an interest rate of 4 per cent. The interest is paid at the end of each year. The bonds may be converted to ordinary shares in Invest Ltd at any time in the next three years. Organisations similar to Invest Ltd have recently issued similar debt instruments but without the option for conversion to ordinary shares. These instruments issued by the other entities offer interest at a rate of 6 per cent. On 1 July 2024, all the holders of the convertible notes decided to convert the bonds to shares in Invest Ltd. REQUIRED: 1. Assuming asset revaluations were undertaken for the land in both 2021 and 2023, provide the journal entries for both years. (4 Marks) 2. Provide journal entries to (a) record the issue of the securities on 1 July 2023, (b) recognise the interest payment on 30 June 2024 and (c) recognise the conversion of the bonds to ordinary shares on 1 July 2024
