User Account

All Pages

Provide the appropriate accounting entries

Assignment Help Accounting Basics
Reference no: EM132950707

Question - Bay Ltd issued $20 million of convertible notes on 1 July 2022. The notes have a life of 6 years and a face value of $20 each. Annual interest of 5% is payable at the end of each financial year. The notes were issued at their face value and each note can be converted into one ordinary share in Bay Ltd at any time over their lives. Organizations with a similar risk profile to Bay Ltd have issued debt with similar terms but without the option to convert at the rate of 7%.

Required -

A) Assume the holders of the convertible notes elect to convert the notes to ordinary shares at the end of the first year of the notes. Provide the appropriate accounting entries to record these events in the general journal of Bay Ltd.

B) Paragraph 15 of AASB 132/IAS 32 requires distinguishing between financial liabilities and equity instruments for the issuing entity. However, In general, the issuing entity, including Bay Ltd, will prefer an equity classification. Briefly discuss why firms prefer to classify a financial instrument as an equity instrument rather than financial liabilities.

Reference no: EM132950707

Questions Cloud

What total face value of bonds must be sold : A firm needs to raise $338 million to expand operations. What total face value of bonds must be sold to raise the cash
Which is most likely a topic of discussion in microeconomics : Which is most likely a topic of discussion in microeconomics? an increase in the sale of automobiles./ An increase in the inflation rate
Differences between a charity and a corporation : What are the similarities and differences between a charity and a corporation?
Employee performance evaluation and review process : Focus: Design a formal employee performance evaluation and review process that managers can use in evaluating the performance of cashiers at Stop and Shop super
Provide the appropriate accounting entries : Bay Ltd issued $20 million of convertible notes on 1 July 2022. Provide the appropriate accounting entries to record these events in the general journal of Bay
Explain positive reinforcement : The relationships between positive reinforcement and individual performance are often intuitive but well-documented. In the era of knowledge-based economies, or
How much should carlson bonds sell for today : The bonds mature in 16 years and can be called away in 7 years at a 4% call premium. How much should Carlson bonds sell for today?
Explain impact of the public holiday : On the following page list 7 public holidays and indicate if you think they would be good for business or bad for business and tell us why.
What is leadership role in apple strategic implementation : What is leadership's role in Apple's strategic implementation?

Reviews

Write a Review

Accounting Basics Questions & Answers

  What is the target selling price per unit

Expected annual sales 500000 units and Desired profit per unit $0.35. What is the target selling price per unit

  Consider a situation in which you or someone you know

consider a situation in which you or someone you know engaged in a written or oral contract containing specific

  Compute the yield to call

The call premium is one year of coupon payments. (Assume interest payments are semi-annual and a par value of $5,000.) Compute the yield to call

  Calculate the cost of the units

Using this data, calculate the cost of the units that were transferred out of the Mixing Department and into the Refining Department

  Record entries for the above transactions

September 14, 2016: Provided services to Inga Corporation on account, $3,000, terms 30 days. Required: Record entries for the above transactions

  Prepare Cory statement of retained earnings

Prepare Cory's statement of retained earnings and any related notes to its financial statements for the year ended December 31, 2019

  Calculate the financial performance after tax

Calculate the P&L (financial performance after tax) and the break-even point in units - Fixed Manufacturing Costs (Exl Depreciation) $28,000.00

  Prepare a pre-distribution plan for this partnership

The partnership of Frick, Wilson, and Clarke has been elected to cease all operations and liquidate its business property. Prepare a pre-distribution plan

  Prepare journal entries to reflect issuance of mortgage

Prepare journal entries to reflect (a) the issuance of the mortgage note payable, (b) the payment of the first installment on July 1, 2018

  Find total cost of departmental work in process inventory

The first-in, first-out method of inventory costing is used. The total cost of the departmental work in process inventory at the end of the period

  What differences between an audit and review engagement

Identify two differences between an audit and a review engagement. Your firm, Apple Bee and King LLP, has performed at the request of the bank review engagement

  If net income is 120000 and interest expense is 42500 for

1. . the balance sheets at the end of each of the first two years of operations indicate the following2009

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd