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75% of $4m loan converted to shares at the rate of 20 shares per $100 loan
That’s $3m / 100 * 20 shares issued = 600,000 shares of $1 each
Debit loan notes, credit share capital with $600,000
But, following that issue, the amount of the loan liability has fallen by $3m so the shares must nave been worth $5 each.
600,000 shares issued at a value of $5 means 600,000 at $1 face value plus 600,000 premium of $4 each = $2,400,000
OK?
ok Sir but one thing still doubtful is that in note iii it is mentioned that 4ooo of the convertible loan notes matured so there are still 1000 left i mean there are still 1000 in 20X9 why did u take the difference of 4000 and 1000 shouldnt that be 4000 ?
and Sir on more thing plz explain how come loan notes redeemed = 1000
is it 600+400( bln. fig)The two balance sheets clearly show that loan notes outstanding last year were $5,000 and this year they are $1,000
That ties in nicely with “during the year $4,000 loan notes matured”
The question goes on to say that 75% exercised the equity option and the above post from me explains why that results in a premium movement of $2,400
“still 1000 in 20X9 why did u take the difference of 4000 and 1000 shouldnt that be 4000” Heaven knows what you’re talking about! I have no idea
“and Sir on more thing plz explain how come loan notes redeemed = 1000 is it 600+400( bln. fig)” If 75% of $4,000 exercise the share option on conversion, what did the other 25% do? And how much is 25% of $4,000?
OK?
yes Sir sorry for silly question !!!! all that confusion was due to not taking account of 25%..u made it clear
Thank you
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