Brief Exercise 16-11 On January 1, 2017, Wildhorse Ltd. issued 890 3-year, 3% co

Question

Brief Exercise 16-11 On January 1, 2017, Wildhorse Ltd. issued 890 3-year, 3% convertible bonds at par of $950, with interest payable each December 31. Each bond is convertible into 75 common shares, and the current fair value of each common share is $7 per share. Similar straight bonds carry an interest rate of 9%. ?Your answer is incorrect. Try again. Calculate the PV of the debt component by itself. (Round answer to 0 decimal places, e.g. 5,250.) PV of the debt component SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT

Explanation / Answer

PV of debt component

The Journal entries

Equity Component = Total Proceeds - Debt Component

..................................=(950*890) -717,102

...................................=128,398

Under IFRS

-Debiting Bank as money is received from Issuing Bond

- The credit split to Payable and equity Component

Under ASEP,

Debit Credit Cash (950*890)=845,500 Bond Payable (a)717,102 Share Premium- Equity Component (b)129,398

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