Page 62 - F2 Integrated Workbook STUDENT 2019
P. 62
Chapter 3
2.2 Convertible loan initial recognition
Step 2 – PV of cash flows X
Step 3 – Equity X β
–––
Step 1 – Cash from loan X
–––
Journal to record convertible loan
Dr Cash (from step 1)
Cr Liability (from step 2)
Cr Equity (from step 3)
The accounting treatment above illustrates the INITIAL recognition of
the convertible loan only.
The liability would be subsequently measured at amortised cost
(see section 3.3).
54
