Question: On January 1, 2017, Cullumber Ltd. issued 710 3-year, 5% convertible bonds at par of $930, with interest payable each December 31. Each bond is

On January 1, 2017, Cullumber Ltd. issued 710 3-year, 5% convertible bonds at par of $930, with interest payable each December 31. Each bond is convertible into 50 common shares, and the current fair value of each common share is $6 per share. Similar straight bonds carry an interest rate of 7%. Calculate the PV of the debt component by itself. How should Blossom record the issuance if it follows IFRS?

Step by Step Solution

★★★★★

3.57 Rating (157 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The fair value of the conversion option is 60 per bond The PV of the debt com... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Grant Corp invested $1.8M on 4/1/2019. At the time, the project manager assigned forecasted that the cost of capital was 17% and the profit change for year ended '19 - '23 were as follows: 300K,...

On January 1, 2018, LMU, Inc. issued $250,000 of 6%, 10 year bonds for $216,025, yielding an effective interest rate of 8%. Semiannual interest is payable on June 30 and December 31 each year. The...

Following are the issuances of stock transactions. 1. A corporation issued 3,000 shares of $30 par value common stock for $108,000 cash. 2. A corporation issued 1,500 shares of no-par common stock to...

Current Attempt in Progress On January 1, 2020, Wildhorse Corporation issued 11% bonds with a par value of $5,170,000, due in 10 years. The company incurred $195,000 in costs associated with the...

On January 1, 2017, MacGregor Ltd. issued 1,000 five-year, 10% convertible bonds at par of $1,000, with interest payable each December 31. Each bond is convertible into 100 common shares, and the...

On January 1, 2017, Chilton Ltd. issued $500,000 of 5%, 5-year bonds. The bonds were issued to yield a market interest rate of 6%. Chilton's year end is December 31. On January 1, 2019, immediately...

Multiple Choice Questions Identify the best answer for each of the following: Questions 1 through 4 are based on the following scenario: On January 1, 20X7, Clyde County issued $100 million of 5%,...

On January 1, 2017, Power Ltd. issued bonds with a maturity value of $5 million for $4,797,000, when the market rate of interest was 8%. The bonds have a contractual interest rate of 7% and mature on...

On January 1, 2017, Gottlieb Corporation issued $4,000,000 of 10-year, 8% convertible debentures at 102. Interest is to be paid semiannually on June 30 and December 31. Each $1,000 debenture can be...

An excerpt from the statement of financial position of Twilight Limited follows: 1. Options were granted/written in 2019 that give the holder the right to purchase 100,000 common shares at $8 per...

On January 1, 20X7, Clyde County issued $100 million of 5%, 20-year bonds at 102. Interest is payable semiannually. The proceeds were restricted for the construction of a new county water...

A Charged Dielectric Disk. A thin disk of dielectric material with radius a has a total charge + Q distributed uniformly over its surface. It rotates n times per second about an axis perpendicular to...

Comment on the different functions of the credit manager.

Question Interview about Staff Accountant 1. What is the difference between AR and AP? 2. Tell me about a time you set a challenging goal and what you did to achieve it. 3. When you have competing...

Portfolio Expected Return you own a portfolio that is 50 percent invested in Stock X. 30 percent in Stock Y, and 20 percent in Stock Z. The expected returns on these three stocks are 10 percent, 16...

Portfolio Expected Return you have $10,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 15 percent and Stock Y with an expected return of 10 percent. If your...

Selected journal entries for the Finney Company are presented in BE2-7. Post the transactions using the standard form of account.

The following information is available for the first month of operations of Url Inc., a manufacturer of art and craft items: Sales.................... $1,200,000 Gross profit.....................

Vectors d1 is in the negative direction of a y axis, and vector d2 is in the positive direction of an x axis. What is the direction of? (a) d2/4 and (b) d1/( 4)? What are the magnitudes of products?...

S, mi deporte favorito que depende del clima es el senderismo. Cuando hace sol y la temperatura es agradable, me encanta salir a explorar senderos en las montaas. Tambin disfruto del ciclismo cuando...

Check if the answers are correct. IF the answers are correct, copy the answer. if there is a mistake then fix it. *Additional Problem 6 Presented below Is Information which relates to Cullumber...

1. Vaughn Corporation issues $560,000 of 9% bonds, due in 9 years, with interest payable semiannually. At the time of issue, the market rate for such bonds is 10%. Compute the issue price of the...

On January 1, 2017, Cullumber Corporation signed a 5-year noncancelable lease for a machine. The terms of the lease called for Cullumber to make annual payments of $8,200 at the beginning of each...

Basic managerial accoutning * Question 1 On January 1, 2017, Cullumber Company's accounting records contained these liability accounts. Accounts Payable $45,000 Sales Taxes Payable 7,850 Unearned...

On January 1, 2017, Cullumber Company purchased a copyright for $2420000, having an estimated useful life of 16 years. In January 2021, Cullumber paid $417000 for legal fees in a successful defense...

At January 1, 2017, Cullumber Company reported the following property, plant, and equipment accounts: Accumulated depreciationbuildings $61,550,000 Accumulated depreciationequipment 54,800,000...