Page 170 - SBR Integrated Workbook STUDENT S18-J19
P. 170
Chapter 12
Example 4
Convertible bond
On 1 January 20X4, Fried issued $10 million 3% bonds at par. Interest is paid
in arrears. The loan notes will be redeemed in cash at par on 31 December
20X6, or in the form of a fixed number of ordinary shares. The interest rate on
similar bonds without a conversion option is 6%.
How should the bond be accounted for in the year ended 31 December
20X4?
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