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Please, i have gone through where i made some mistakes but could you assist me as to where the convertible option figure become 424k.
The answer says As the full amount of $8m has been taken to liabilities , adjustment required is;
Dr Liability $424k
Cr Equity $424k.Hi,
For convertible debt we use split accounting, so recognise both debt and equity on initial recognition. As the full amount of $8m has been recognised as debt, which is incorrect, then the $424k needs to be removed from liabilities and correctly shown as equity.
Thanks
Exactly but how did they arrive at $424k ? I am trying to figure it out but i could not . could you please assist?
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