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Q] 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%, are given…
How would the convertible loan appear in Bertrand’s statement of financial position on initial
recognition (1 October 20X3)?MY DOUBT] The answer given is in terms of equity and non current liability, and the solution for NCL given is 9,190k. But shouldn’t this value be considered as total liability and not the ‘non current’ liability, since we are looking at the initial recognition of this loan and not its value at the y/e financials?
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