Unicorn Ltd (Unicorn) is one of the lending retailers selling high quality, great value clothing and home products as well as outstanding quality food, is currently reviewing the fair value of certain assets for the preparation of financial statements as at 31 March 2020. Unicorn operates a factory in Vietnam. The factory contains a large amount of equipment that is used in the manufacture of home products. Unicorn owns both the factory and the land on which the factory stands. The land was acquired in 2010 for $2,000,000 and the factory was built in that year at a cost of $780,000. Both assets are recorded at cost, with the factory having a carrying amount at 31 March 2020 of $390,000. In recent years a property boom in Vietnam has seen residential building prices double. The average price of a building is now approximately $750,000. A property valuation group used data about recent sales of land in the area to value the land on which the factory stands at $3,000,000. The land is now considered prime residential property given its closeness to the city of the capital in Vietnam and, with its superb river views, its suitability for building executive apartments. It would cost $150,000 to demolish the factory to make way for these apartments to be built. It is estimated that to build a new factory on the current site would cost around $1,170,000. On 1 April 2020, Unicorn issued $8,000,000 convertible bond at par with coupon interest rate of 2% per annum which is payable annually in arrears. The convertible bond will mature on 31 March 2025. The holders are entitled to redeem at a premium of $500,000 above par upon maturity. The convertible bond holders are entitled to convert the convertible bond into 4 million ordinary shares of Unicorn on maturity. The prevailing market interest rate of a similar type of instrument without conversion option is 6% and the relevant present value factors of a single sum and of an ordinary annuity are 0.74726 (PVF5,6%) and 4.21236 (PVF-OA5,6%) respectively.

Discuss the way in which Unicorn should fair value the land and building (as a whole and separately) with reference to the principles of HKFRS 13 'Fair Value Measurement'. In your answer, you should refer to the highest and best use in your discussion and Classify the convertible bond issued by Unicorn on 1 April 2020 and prepare journal entries for the issue of convertible bond on 1 April 2020