Prepare the entry to record exercise of conversion option

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Question - Crane Corporation had two issues of securities outstanding: common shares and a 9% convertible bond issue in the face amount of $7 million. Interest payment dates of the bond issue are June 30 and December 31. The conversion clause in the bond indenture entitles the bondholders to receive 20 no par value common shares in exchange for each $1,000 bond. The value of the equity portion of the bond issue is $65,000. On June 30, 2020, the holders of $2.10 million of the face value bonds exercised the conversion privilege. The market price of the bonds on that date was $1,180 per bond and the market price of the common shares was $66. The total unamortized bond discount at the date of conversion was $503,000.

Prepare the entry to record the exercise of the conversion option, using the book value method. Assume the company follows IFRS.

Reference no: EM132992243

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