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Record the redemption entry for english bay limited

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Reference no: EM132774577

English Bay Limited (EBL), an IFRS reporting company with a December 31 year end, wants to raise capital on the bond market. EBL had the securities lawyers write up a debenture bond issue for 15 years at a face value of $12,000,000 and a coupon rate of 3%. The bond issue was dated and ready to take to market on October 1, 2019 with semi-annual interest payments (October 1 & April 1).

  • The underwriters, monitoring the market interest rates, convinced EBL to wait and the bond was actually taken to market on April 1, 2020 at a yield rate of 4%. The Bank of Canada rate at the date of issue was 1.5%.
  • EBL applies a separate bond discount or premium account, as required.
  • On April 1, 2025, after the bond interest payment, EBL had excess cash and went to the open market and redeemed 30% of the bond issue when the market yield rate was 6%.

Required:

Problem 1: Record the redemption entry; show supporting calculations.

Reference no: EM132774577

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