Accountancy
Fortune Cookie Inc. (FCI) issued $10 million of 10-year, 5% convertible bonds on April 1, Year 5 at 102. Coupons are payable on April 1 and October 1. Bonds without conversion privileges would have sold at 101.5. On February 1, Year 12, $3 million of these bonds were converted to 30,000 common shares. Accrued interest was paid in cash at the time of conversion.
(1) Determine the amount to be assigned to common shares at the time of conversion, assuming FCI follows IFRS. [12 marks]
(2) Determine the amount to be assigned to common shares at the time of conversion, assuming the followings: [12 marks]
1. FCI follows ASPE.
2. FCI uses zero common equity method for convertible bonds
3. FCI uses straight-line method for the amortization of discount/premium on bonds.
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The December 31, 2017, balance sheet of Kepler Corp. is as
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dates April 30 and October 31; convertible into 6
shares of $25
par value common stock per $1,000 of
bond principal; maturity date April 30, 2023)
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$489,760
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follows.
10% callable, convertible bonds payable (semiannual
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On March 5, 2018, Kepler Corp. called all of the bonds as of April
30 for the principal plus interest through April 30. By April 30,...
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