Prepare the relevant statement of profit or loss

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Question - In a bid to raise additional financing to support an expansion in operations, Soca Ltd issued a 5% $22 million convertible loan note on June 1, 2021. The loan note, which has a market interest rate that is 3% higher than its coupon rate, is redeemable at par on May 31, 2025, or alternatively, may be converted into equity at a conversion rate of 25 ordinary shares per $200 issued.

Required -

1. Determine the liability and equity components of the instrument at inception.

2. Prepare the schedule reflecting the amortisation of the instrument over the issue period.

3. Prepare the relevant statement of profit or loss and statement of financial position extracts for year two.

Reference no: EM133143042

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