chapter 15 convertible debt

This topic has 5 replies, 2 voices, and was last updated 5 years ago by Stephen Widberg.

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August 5, 2020 at 11:35 pm #579385

shah19888888
Participant

Hello Sir,

Quick question on quoted above, how would the final year double entry work if the equity option was exercised?

regards

August 6, 2020 at 7:10 am #579393

Stephen Widberg
Keymaster

Dr Liability – with carrying amount
Cr SC – nominal value of shares issued
Cr SP – balance

August 6, 2020 at 3:27 pm #579441

shah19888888
Participant

Hi Stephen,

So just for my knowledge.

If year 3 opening was 10m interest was 1m and we received 500k as payments as interest. Then 10.5m would be transferred to equity?

Regards

August 6, 2020 at 5:40 pm #579455

Stephen Widberg
Keymaster

I am afraid I do not understand your question. Convertible loans is concerned with liabilities and equity, not with a receipt of interest.

Any transfer to equity will only take place on maturity of the bond should the investors choose to swap the shares

August 8, 2020 at 2:43 pm #579643

shah19888888
Participant

Sorry i worded it wrong, and i now have understood your initial response.

Thank you

August 9, 2020 at 6:36 pm #579763

Stephen Widberg
Keymaster

My pleasure
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