Question: On January 1, 2014, MacGregor Ltd. issued 1,000 3-year, 5% convertible bonds at par of $1,000, with interest payable each December 31. Each bond is

On January 1, 2014, MacGregor Ltd. issued 1,000 3-year, 5% convertible bonds at par of $1,000, with interest payable each December 31. Each bond is convertible into 100 common shares, and the current fair value of each common share is $8 per share. Similar straight bonds carry an interest rate of 9%.

(a) Calculate the PV of the debt component by itself.

(b) How should MacGregor record the issuance if it follows IFRS?

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