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ID: 2610094 • Letter: A

Question

al Login M 1401861 Connect into. noul connect A corn ect nt eductioncom tw connecthtnit siger n returnuri. https%3A%2F%2F corectmhedicat roomerpaamwebandexhtml% re Built Problems 6 Saved Help Save & Exit Submit Check my work On January 1 2018, Gless Textiles issued $13.1 million of 99, 10 year convertible bonds at 103 The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 50 shares of Gless's no par common stock. Bonds that are similar in al respect except that they are nonconvertible, currently are selling at 99 that is 99% of face amount Century Services purchased 10% of the issue asan investment. Required Assume Gless Textiles prepares its financial statements according to International Financial Reporting Standards. Prepare the journal entry for the issuance of the bonds by Gless using the net method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet

Explanation / Answer

Answer:

Event

Description

Debit $

Credit $

Cash (103*13.1 million)

13493000

Convertible Bonds payable
(Value of the investment) (99%*13.1 million)

12969000

Equity-conversion option( Balance)

524000

(to record the issuance of the bond)

Note:

Under the IFRS convertible debt is divided in to the liability and equity element