An entity issues 2% convertible bonds at their nominal value of $36,000. Interest is payable annually in arrears. The bonds are convertible at any time up to maturity into 40 ordinary shares for each $100 of bond. Alternatively, the bonds will be redeemed at par after 3 years. Similar non-convertible bonds would carry an interest rate of 9.1%. The present value of $1 payable at the end of year, based on rates of 2% and 9.1% are as follows:

End of year 2% 9.1%

1 0.98 0.92

2 0.96 0.84

3 0.94 0.77

i) What amounts will be shown as a financial liability and as equity when the convertible bonds are issued?

ii) What amounts will be shown in the statement of profit or loss and statement of financial position for years 13?

Work to the nearest $000.