Convertible bonds

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April 27, 2017 at 11:11 am #384116
hemraj123
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Sir, in example 4 of chapter 16, the calculation shows the separation of liability and equity. Wont this be the initial recognition?

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May 1, 2017 at 7:39 pm #384495
P2-D2
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Hi,

Yes, on initial recognition we recognise the liability element as the present value of the future cash flows, assuming no conversion takes place, and the equity element is then the difference between this figure and the proceeds.

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