You are the Chief Finance officer for Mazembe Limited, A company engaged in construction of apartments for third parties. Mazembe has 200 employees in total and the following transactions have arisen that require you advise on how they should be reported.

1. In its quest to raise funds for the construction of the apartments, Mazembe issued 1 million convertible bond for K200 million on 1 January 2019. The bonds are redeemable for cash or convertible into equity shares on 31 December 2021. Interest is paid annually in arrears at a rate of 6% per annum and bonds without conversion options attract an interest rate of 9% per annum on 1 January 2019. Mazembe incurred issue costs of K2 million. At maturity, all of the bonds were converted into 25 million ordinary shares of K1 each of Mazembe. No bonds could be converted before that date. The impact of the issue costs is to increase the interest rates to 9.38%. If the investor did not convert bond to shares, they could have been redeemed at par. (7 marks)