The Following Journal Entry Pertains to Convertible Notes with a Face

question 3

Multiple Choice

The following journal entry pertains to convertible notes with a face value of €10 million: $\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Convertible notes liability } & 9814806 & \\\hline \mathrm{Dr} & \text { Convertible notes (equity component) } & 662432 & \\\hline \mathrm{Cr} & \text { Share capital } & & 10477238\\\hline\end{array}$ Which of the following statements are correct?

• A)The instrument was over-valued when it was initially recognised.
• B)The convertible note has been converted.
• C)The value of the option to convert has increased over the period from initial recognition to conversion, by €477 238.
• D)The instrument was over-valued when it was initially recognised and the value of the option to convert has increased over the period from initial recognition to conversion, by €477 238.

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Definitions:

Symbolic Form

the representation of objects, concepts, or actions by symbols to facilitate understanding or communication.

Components

Basic elements or parts that make up a system or device.

Connective

A term used in mathematics and logic to denote operations that combine statements, propositions, or terms.

Conditional Statement

A logical statement that has two parts: a hypothesis (if) and a consequent (then), where the consequent follows logically from the hypothesis.