Problem 2 (7 Marks) Starlight Inc. follows IFRS. It issues ten-year, 6% convertible bonds (par $ 1,000), with interest paid annually. Each $1,000 bond may be converted into 50 common shares, which are currently trading at $17 per share. Similar straight bonds bear an interest rate of 8%. One thousand bonds are issued at 91. Instructions (a) Assume Starlight uses the residual method and measures the debt first. Calculate the amount to be allocated to the bond and to the option. (b) Prepare the journal entry at date of issuance of the bonds. (c) Assume that after six years, the carrying amount of the bonds is $ 933,757. The holders of the convertible debt decide to convert their convertible bonds before the bond maturity date. Prepare the journal entry to record the conversion. (d) How many shares were issued at the conversion?