The following are unrelated transactions.
1. On March 1, 2011, Loma Corporation issued $300,000 of 8% non-convertible bonds at 104, which are due on February 28, 2028. In addition, each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase for $50 one of Loma’s no par value common shares. The bonds without the warrants would normally sell at 95. On March 1, 2011, the fair market value of Loma’s common shares was $40 per share and the fair market value of each warrant was $2. Loma prepares its financial statements in accordance with IFRS.
2. Grand Corp. issued $10 million of par value, 9%, convertible bonds at 97. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 93. Grand Corp. has adopted ASPE, and would like to explore all options available to report the convertible bond.
3. Hussein Limited issued $20 million of par value, 7% bonds at 98. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $6. Hussein Limited had adopted ASPE.
4. On July 1, 2011, Tien Limited called its 9% convertible debentures for conversion. The $10 million of par value bonds were converted into 1 million common shares. On July 1, there was $75,000 of unamortized discount applicable to the bonds, and the company paid an additional $65,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method. The balance in the account Contributed Surplus—Conversion Rights was $270,000 at the time of conversion.
5. On December 1, 2011, Horton Company issued 500 of its $1,000, 9% bonds at 103. Attached to each bond was one detachable stock warrant entitling the holder to purchase 10 of Horton’s common shares. On December 1, 2011, the market value of the bonds, without the stock warrants, was 95, and the market value of eacwh stock warrant was $50.
Horton Company prepares its financial statements in accordance with IFRS.
Instructions
Present the required entry(ies) to record each of the above transactions.