X Corporation reported the following information in its December 31,2020 financial statements.

10.CONVERTIBLE BONDS(in part):

On April 30th,2019, the Corporation issued $40,000,000, 10%, convertible bonds due on April 30^th,

2022,.Interest is due semi-annually on April 30^th. And October 31^st.each year.The convertible bonds

are convertible at the option of the holder at any time prior to April 3oth, 2022 in whole or in

multiplies of $1,000, into common shares of the Corporation at a conversion price of $1.00 per

common share which is equal to the issuance on conversion of approximately40,000,000

common shares in total.

At December 2019, $38,182,000 of the convertible bonds , net of transaction costs, has been attributed

to the debt component and $1,920,000 has been attributed to the equity component of the

Instrument.The difference between the carrying value and the face value of the convertible bonds

will be accounted for using the effective interest rate method.

X Company reported $39,667.000 cash proceeds from the issue of the convertible bonds .

Required:-

a.What is the face value of the bonds(1 mark)

b.Indicate the stated rate of the bonds(1 mark)

c.Identify three(3) balance sheet accounts that are affected when convertible bonds are issued(3 marks)

d.Explain how a gain/loss is calculated at the time of conversion of the bonds to common stock

(5 marks).

e.Assume none of the bonds have been converted or retired by Decmber 31^st.2019, determine

The net value of the bonds at the date of issue (3 marks)