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Record the issuance of the bonds and warrants

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Question - Blossom Capital Ltd. issued 550 $1,000 bonds at 105. Each bond was issued with 10 detachable stock warrants. After issuance, similar bonds were sold at 99, and the warrants had a fair value of $2.60.

Required - Record the issuance of the bonds and warrants assuming that Blossom Capital follows IFRS.

(i) Assuming that Blossom Capital follows ASPE (residual value method), record the issuance of the bonds and warrants assuming that the debt is the more easily measurable component.

(ii) Assuming that Blossom Capital follows ASPE (residual value method), record the issuance of the bonds and warrants assuming that the equity is the more easily measurable component.

(iii) Assuming that Blossom Capital follows ASPE and values the equity component at zero.

Reference no: EM133073062

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