Economic implications for disclosure of convertible bonds

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Question

XYZ Ltd issued some convertible bonds to ABC Ltd. They have a life of five years and pay interest to ABC Ltd each six months. The convertible bonds will be converted to shares only if ABC Ltd makes the decision, at any time in the next five years, that it would prefer to receive shares in XYZ Ltd, rather than have its funds repaid.

Explain the economic implications for disclosure of convertible bonds in the books of XYZ Ltd.

Reference no: EM133227889

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