In a bid to raise additional financing to support an expansion in operations, Soca Ltd issued...

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In a bid to raise additional financing to support an expansion in operations, Soca Ltd issued a 5% $22 million convertible loan note on June 1, 2021. The loan note, which has a market interest rate that is 3% higher than its coupon rate, is redeemable at par on May 31, 2025, or alternatively, may be converted into equity at a conversion rate of 25 ordinary shares per $200 issued. REQUIRED: o Determine the liability and equity components of the instrument at inception. • Prepare the schedule reflecting the amortisation of the instrument over the issue period. • Prepare the relevant statement of profit or loss and statement of financial position extracts for year two. Note: There should be no rounding of the present value interest factors, i.e. the full values calculated should be applied. In a bid to raise additional financing to support an expansion in operations, Soca Ltd issued a 5% $22 million convertible loan note on June 1, 2021. The loan note, which has a market interest rate that is 3% higher than its coupon rate, is redeemable at par on May 31, 2025, or alternatively, may be converted into equity at a conversion rate of 25 ordinary shares per $200 issued. REQUIRED: o Determine the liability and equity components of the instrument at inception. • Prepare the schedule reflecting the amortisation of the instrument over the issue period. • Prepare the relevant statement of profit or loss and statement of financial position extracts for year two. Note: There should be no rounding of the present value interest factors, i.e. the full values calculated should be applied.

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1 Determination of Liability and Equity Components In order to determine the liability and equity components of the instrument we need to first calcul... View the full answer