Question: Please no handwriting, just type the answer. Please do NOT use AI (ChatGPT) (a) Define an equity instrument and a financial liability. Required: Provide at

Please no handwriting, just type the answer. Please do NOT use AI (ChatGPT)

(a) Define an equity instrument and a financial liability. Required: Provide at least one example for each and explain how they differ from each other. (b) Summer Ltd issued 2 million convertible bonds on 1 July 2022. The bonds had a term of 3 years and were issued with a total fair value of $2 million which is also the par value. Interest is paid annually in arrears at a rate of 7% per annum. The holders are entitled to convert each $1,000 bonds at the par value into 100 ordinary shares of Summer Ltd at contract maturity. Bonds without the conversion option attracted an interest rate of 9% per annum on 1 July 2022. Other information: PV of an annuity of $1 PV of $1 Years 7% 9% Years 7% 9% 3 2.6243 2.5313 3 0.8163 0.7722 4 3.3872 3.2397 4 0.7629 0.7084Required: Provide appropriate accounting entries to record (rounded to the nearest dollar): (1) the issue of the convertible bonds on 1 July 2022 (2) the payment of convertible bond interest on 30 June 2023 (3) the redemption of all convertible bonds on 30 June 2025 if not converted into ordinary shares.\f

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