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How would treat the transaction

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On January 1, 2019, LLI issued 10,000 10-year, 6% convertible bonds for total proceeds of $10,000,000. The bonds pay interest each December 31. Each $1,000 bond is convertible into 10 common shares at maturity at the option of the holder. Similar bonds without the conversion feature are sold to yield 8%.

The bonds were recorded on January 1 with the following journal entry:

DR Cash 10,000,000
CR Bonds payable 10,000,000

Problem 1: Under IFRS, how would you treat this transaction? Has it been accounted for correctly?

Reference no: EM132733356

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