Question 2. This question is compulsory L Co issues 4,000 convertible bonds on 1 January 2019 at par. The bond is redeemable 3 years later at its par value of $500 per bond which is its nominal value. The bonds pay interest annually in arrears at an interest rate of 5%. Each bond can be converted at the maturity date into 30 $1 shares. The prevailing market interest rate for 3 year bonds that have no right of conversion is 9%. Required: Show the statement of financial position at 1 January 2019. (25 marks) Cumulative 3 year annuity factors: 5% 2.723 9% 2.531 (b) K Co purchases a bond for $441,014 on 1 January 2019. It will be redeemed on 31 December 2022 for $600,000. The bond is held at amortised cost and carries no coupon. The effective interest rate is 8%. Required: Calculate the value of the bond for the statement of financial position as at 31 December 2019, and the finance income for 2019 shown in profit or loss. (15 marks)