Bayside Inc. prepares its financial statements in accordance with IFRS. On January 1, 2023, the company issued $30.0 million, 7%, six-year convertible bonds that pay interest semi-annually on June 30 and December 31. At the option of the bondholder, and at any time before maturity, each $1,000 bond was convertible into 40 of Bayside Inc.'s common shares. Bayside raised $30.6 million from the sale of the bonds. At the time of the sale, the market rate of interest for similar bonds without the conversion feature was 8%. On January 1, 2025, $12.0 million of the bonds were converted. The market price of Bayside Inc.'s common shares at the time of conversion was $35 per share. Required Requirement a. Prepare the journal entry to record the issuance of convertible bonds. (Prepare all entries on the company's books. Record debits first, then credits. Explanations are not required. Enter all amounts in dollars and not in millions. Round amounts to the nearest dollar.) Date January 1, 2023 Cash Accounts Bonds payable Contributed surplus-conversion rights Debit 30,600,000 Credit 28,592,239 2,007,761 Requirement b. Prepare the journal entry to record the conversion according to IFRS (book value method). (Use a financial calculator for any present value computations. Record debits first, then credits. Explanations are not required. Round amounts to the nearest dollar.)
Bayside Inc. prepares its financial statements in accordance with IFRS. On January 1, 2023, the company issued $30.0 million, 7%, six-year convertible bonds that pay interest semi-annually on June 30 and December 31. At the option of the bondholder, and at any time before maturity, each $1,000 bond was convertible into 40 of Bayside Inc.'s common shares. Bayside raised $30.6 million from the sale of the bonds. At the time of the sale, the market rate of interest for similar bonds without the conversion feature was 8%. On January 1, 2025, $12.0 million of the bonds were converted. The market price of Bayside Inc.'s common shares at the time of conversion was $35 per share. Required Requirement a. Prepare the journal entry to record the issuance of convertible bonds. (Prepare all entries on the company's books. Record debits first, then credits. Explanations are not required. Enter all amounts in dollars and not in millions. Round amounts to the nearest dollar.) Date January 1, 2023 Cash Accounts Bonds payable Contributed surplus-conversion rights Debit 30,600,000 Credit 28,592,239 2,007,761 Requirement b. Prepare the journal entry to record the conversion according to IFRS (book value method). (Use a financial calculator for any present value computations. Record debits first, then credits. Explanations are not required. Round amounts to the nearest dollar.)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
Section: Chapter Questions
Problem 26E: Tama Companys capital structure consists of common stock and convertible bonds. At the beginning of...
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Transcribed Image Text:Bayside Inc. prepares its financial statements in accordance with IFRS. On January 1, 2023, the company issued $30.0 million, 7%, six-year convertible bonds that pay interest semi-annually on June 30 and
December 31. At the option of the bondholder, and at any time before maturity, each $1,000 bond was convertible into 40 of Bayside Inc.'s common shares. Bayside raised $30.6 million from the sale of the
bonds. At the time of the sale, the market rate of interest for similar bonds without the conversion feature was 8%.
On January 1, 2025, $12.0 million of the bonds were converted. The market price of Bayside Inc.'s common shares at the time of conversion was $35 per share.
Required
Requirement a. Prepare the journal entry to record the issuance of convertible bonds. (Prepare all entries on the company's books. Record debits first, then credits. Explanations are not required. Enter all
amounts in dollars and not in millions. Round amounts to the nearest dollar.)
Date
January 1, 2023
Cash
Date
January 1, 2025
Accounts
Bonds payable
Contributed surplus conversion rights
Debit
30,600,000
Credit
Requirement b. Prepare the journal entry to record the conversion according to IFRS (book value method). (Use a financial calculator for any present value computations. Record debits first, then credits.
Explanations are not required. Round amounts to the nearest dollar.)
Accounts
Debit
28,592,239
2,007,761
Credit
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