financial instruments journal entries

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    silentassassinor
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    can u plz tell me journal entries for the following:

    deep discount bond- year issued(1st year) and redemption year

    convertibles- year issued(1st year) and redemption year (for both conversion and non conversion)


    Profile photo of MikeLittle
    MikeLittle
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    Are you sure that this is not somewhere in the study text or even in the OT notes?


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    silentassassinor
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    no sir. thats y asking u


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    MikeLittle
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    I can’t believe it – I’ll be back


    Profile photo of MikeLittle
    MikeLittle
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    Page 581 / 582 of Kaplan study text!

    Dr Cash with the net proceeds of issue Credit the Liability

    As each year goes by, unwind the discounted liability,s o

    Dr Finance charges Credit the Liability

    Redemption date?

    Dr the Liability Credit Cash

    Convertible bonds?

    Calculate the debt element. The difference between Net proceeds and Debt element is the Equity element.

    Dr Cash with the net proceeds of the issue Cr the Liability with the debt element, Cr Equity with the equity element

    Unwind the discount and Dr Finance charges Cr the Liability

    On redemption / conversion?

    Dr the Liability Cr Cash with the repayment of the debt

    Dr the Equity heading which was originally credited Cr Share Capital if shares are taken up

    Dr Loan

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