On January 1, 2014, ABC Incorporated Issued $10,000,000 Face Amount

question 24

Essay

On January 1, 2014, ABC Incorporated issued $10,000,000 face amount of 8%, 10 year, subordinate convertible debentures at face value in a private placement.The debentures pay interest annually, in cash, on 31 December.The bonds were issued for $12 million, and that the market rate was 6%:
Prepare Journal entry to record the interest payment on the first interest date of 31 December 2014.

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Definitions:

Long-Term Debt

Represents loans and financial obligations lasting over one year that a company owes and is recorded on its balance sheet.

Synergy Value

The potential additional value generated from combining two companies, often expected from cost savings or by achieving higher revenues.

Equity-Financed

Describes a business funding model where capital is raised through the sale of equity or shares in the company rather than through borrowing.

Cash or Stock

An option given to shareholders or partners, typically during a merger or acquisition, to receive payment in cash, stock, or a combination of both.