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Record the interest expense for the six months ended june

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Reference no: EM132837205

Sea-to-Sky Limited (SSL), a December 31 year end publically traded company, issued convertible bonds on January 1, 2020, when the market rate was 6% and maturing on January 1, 2030. The bond terms stated:

  • "$8,000,000 of 7% subordinated convertible debentures, interest payable semi-annually, (June 30, December 31) convertible at the investor's option until or at maturity into Class B common shares of the company at a rate of 50 shares for each $1,000 denominated bond issued."
  • The bonds were issued for net proceeds of $8,700,000. Independent option pricing models indicated a value of the conversion right approximated $102,500. SSL applies the effective interest rate method and, if applicable, records discounts or premiums in a separate account.

Problem 1: Record the issuance of the bonds; with supporting computations.

Problem 2: Record the interest expense for the six months ended June 30, 2020

Reference no: EM132837205

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