The Following Journal Entry Pertains to Convertible Notes with a Face

question 28

True/False

The following journal entry pertains to convertible notes with a face value of $10 million:
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.
E. The instrument was over-valued when it was initially recognised and the convertible note has been converted.

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Definitions:

Maturity Date

The specified date on which the principal amount of a bond, loan, or other financial instrument is due to be paid in full.

Maturity Value

The amount payable to the investor at the end of a debt instrument's life, including principal and any remaining interest.

Interest

The cost of using borrowed money or the return on invested funds, typically expressed as an annual percentage of the principal.

Purchased Equipment

Fixed assets bought for operational purposes, such as machinery or office fixtures.