A Company Issues Convertible Bonds with Face Value of $7,000,000

question 76

Essay

A company issues convertible bonds with face value of $7,000,000 and receives proceeds of $8,500,000.Each $1,000 bond can be converted,at the option of the holder,into 100 common shares.The underwriter estimated the market value of the bonds alone,excluding the conversion rights,to be approximately $7,300,000.
Requirement:
Record the journal entry for the issuance of these bonds based on IFRS.

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Definitions:

Writ of Summons

A legal document issued to initiate court proceedings, formally notifying the defendant of the action against them and requiring their response.

Statement of Claim

A statement of claim is a legal document filed in court that outlines the plaintiff's allegations against the defendant, serving as the initial step in a legal action.

Plaintiff Opens Trial

The initial phase of a trial in which the plaintiff, or person bringing the case, presents their argument or evidence first.

Contingency Fees

A payment arrangement where a lawyer's fee is contingent on winning the case, typically a percentage of the settlement or judgment.