Which cash proceeds related to the issuance should be

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On Jan 1, 2019, Pegasus Co. issued 15-year convertible bonds at 104. During 2020, the entirety of the bonds were converted into common shares with a total value equating to the entire face amount of the bonds. At the point of conversion, the market price of Pegasus Co's common shares was 55% above its avg. carrying amount. Pegasus Co follows IFRS. At the point of issuance of the bonds, cash proceeds related to the issuance should be reported as:

Problem 1: contributed surplus for the entire proceeds.

Problem 2: contributed surplus for the portion of the proceeds attributable to the conversion feature and as a liability for the balance.

Problem 3: a liability for the present value of the bonds and contributed surplus for the balance.

Problem 4: a liability for the entire proceeds.

Reference no: EM132828425

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