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Prepare the journal entry to record the issuance

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Question - On January 1, 2019, Wayward Co. issued a $22 million, 8%, 6-year convertible bond with annual coupon payments. Each $1,000 bond was convertible into 35 shares of Wayward's common shares. Moonbeam Investments purchased the entire bond issue for $23.5 million on January 1, 2019. Moonbeam estimated that without the conversion feature, the bonds would have sold for $21,013.098 and the company use straight line method On January 1, 2020, Moonbeam converted bonds with a par value of $8.58 million. At the time of conversion, fair value was 8,475,711 and moonbeam paid 1,200,00 cash.

Required -

a. Prepare the journal entry to record the issuance of convertible bonds.

b. Prepare the journal entry to record the conversion according to ASPE.

Reference no: EM133025588

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