Q22:Suppose a firm issues a single bond with a face value of $100,000 which is Convertible into 10,000 Ordinary Shares with a Par Value of $1. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $20,000. Assume that the maturity date of the bonds has now arrived and the bonds will be converted into Ordinary Shares.
The Entry to the “Share Premium – Conversion Equity” account on the date of conversion will be for an amount of:
a. $10,000
b. $20,000
c. None of these answers
d. $110,000
e. $90,000
The Entry to the “Share Premium – Conversion Equity” account on the date of conversion will be for an amount of $1,10,000
Convertible Bonds A/c Dr.$1,00,000
Share Premium - Conversion Equity A/c Dr. $ 20,000
To Equity Share Capital A/c Cr. $1,00,000
To Share Premium - Conversion Equity A/c Cr. $1,10,000
(Being 10,000 shares of face value $1 issued against convertible bonds)
Q22:Suppose a firm issues a single bond with a face value of $100,000 which is Convertible...
q26: Suppose a firm issues a single bond with a face value of $100,000 which is Convertible into 10,000 Ordinary Shares with a Par Value of $1. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $20,000. Assume that the maturity date of the bonds has now arrived and the bonds will be converted into Ordinary Shares. The Entry to the “Share Premium – Ordinary Shares” account on the date of conversion will...
Q24: Suppose a firm issues a single bond with a face value of $100,000 which is Convertible into 10,000 Ordinary Shares with a Par Value of $1. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $20,000. Assume that the maturity date of the bonds has now arrived and the bonds will be converted into Ordinary Shares. The Entry to the “Bonds Payable” account on the date of conversion will be for an...
1- Suppose a firm issues a single bond with a face value of $100,000 which is Convertible into 10,000 Ordinary Shares with a Par Value of $1. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $20,000. Assume that the maturity date of the bonds has now arrived and the bonds will be converted into Ordinary Shares. The Debit Entry to the “Share Premium – Conversion Equity” account on the date of conversion...
q25: Suppose a firm issues a single bond with a face value of $100,000 which is Convertible into 10,000 Ordinary Shares with a Par Value of $1. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $20,000. Assume that the maturity date of the bonds has now arrived and the bonds will be converted into Ordinary Shares. The Entry to the “Bonds Payable” account on the date of conversion will be for an...
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Q21: Suppose a firm issues a 1,000 Convertible Preference Shares for with a par value of $100 each. Each preference share is convertible into 5 Ordinary Shares with a par value of $5. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $200,000. Assume that the maturity date of the Convertible Shares has now arrived and the Convertible Preference Shares will be converted into Ordinary Shares. The Entry to the “Share Capital –...
Suppose a firm issues a 1,000 Convertible Preference Shares for with a par value of $100 each. Each preference share is convertible into 5 Ordinary Shares with a par value of $5. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $200,000. Assume that the maturity date of the Convertible Shares has now arrived and the Convertible Preference Shares will be converted into Ordinary Shares. The Debit Entry to the “Share Capital –...
Q23: Suppose a firm issues a 1,000 Convertible Preference Shares for with a par value of $100 each. Each preference share is convertible into 5 Ordinary Shares with a par value of $5. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $200,000. Assume that the maturity date of the Convertible Shares has now arrived and the Convertible Preference Shares will be converted into Ordinary Shares. The Entry to the “Share Premium –...
1- Suppose a Convertible Bond with a Face Value of $100 million is issued at Par. The fair value (i.e., Present Value of future cash flows) of the Debt Component at the date of issue is $80 million. What is the fair value of the Equity component? a. Zero b. $20 Million c. $120 million d. $180 million e. None of these answers 2-: Suppose 20 Convertible Bonds with a face value each of $1,000 are issued at Par. Each...