Brock Company issued $100,000 convertible 5-year bonds with a face value of $100,000 on January 1, 20X0.

Question:

Brock Company issued $100,000 convertible 5-year bonds with a of $100,000 on January 1, 20X0. The rate on the bonds was 6%, and Brock received $100,000 cash for the bonds. Interest is paid semiannually. The market rate for similar bonds without a conversion factor was 10%. Each $1,000 bond is convertible into 20 shares of Brock Company . At the time of issue of the bonds, Brock sold for $42 per share.

1. How would Brock Company report the issuance of the bonds using U.S. GAAP?

2. How would Brock Company report the issuance of the bonds using IFRS?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...