Question: Question 2 3 0 marks ABC Ltd issued $ 1 0 million of 5 % convertible loan notes at par on January 1 , 2

Question 230 marks
ABC Ltd issued $10 million of 5% convertible loan notes at par on January 1,2010. The loan notes are convertible into 25 shares per $100 of debt on December 31,2012, or can be redeemed for cash. Similar non-convertible loan notes carry an interest rate of 8%.
a. Calculate the initial recognition of the liability component of the loan note using the information provided.
(10 Marks)
b. Determine the equity component of the loan note at initial recognition.
(5 Marks)
The carrying value of the loan note at December 31,2010, is to be calculated.
a. Calculate the carrying value of the liability at December 31,2010. Show all workings.
(10 Marks)
b. Discuss the potential

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