- This topic has 3 replies, 2 voices, and was last updated 6 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
Viewing 4 posts - 1 through 4 (of 4 total)
- You must be logged in to reply to this topic.
Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Convertible
On 1 October 20X3 Bertrand issued $10 million convertible loan notes which carry a nominal interest
(coupon) rate of 5% per annum. The loan notes are redeemable on 30 September 20X6 at par for cash or
can be exchanged for equity shares. A similar loan note without the conversion option would have required
Bertrand to pay an interest rate of 8%.
The present value of $1 receivable at the end of each year based on discount rates of 5% and 8% can be
taken as:
5% 8%
End of year 1 0.95 0.93
2 0.91 0.86
3 0.86 0.79
here u take 10m into the coupon rate which is 5%, i can understand this, then why do you take 500k* the discounts factors of 8% it should be 5 nah?
Please give me a question reference – then I can make sense of what you are writing!
They’re asking how would the convertible loan note appear in SOFP on initial recognition.?
It would appear as a liability of $9,190 and an element of “Other equity” of $810