Sea-to-Sky Limited (SSL), a December 31 year end publically traded company, issued convertible bonds on January 1,
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Question:
"$8,000,000 of 7% subordinated convertible debentures, interest payable semi-annually, (June 30, December 31) convertible at the investor's option until or at maturity into Class B common shares of the company at a rate of 50 shares for each $1,000 denominated bond issued."
The bonds were issued for net proceeds of $8,700,000. Independent option pricing models indicated a value of the conversion right approximated $102,500. SSL applies the effective interest rate method and, if applicable, records discounts or premiums in a separate account.
Round all amounts in the accounting entries to the nearest dollar.
Requirement #1:
Record the issuance of the bonds; with supporting computations.
Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
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