Answered: how are convertible bonds measured…

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how are convertible bonds measured initially on the balance sheet

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

how are convertible bonds measured initially on the balance sheet?

Expert Solution

Step 1

Convertible bonds are a combination of Financial and Liability component. Therefore these are required to be recognized separately as debt and equity component.

The debt and equity component will be recorded separately using with or without approach.

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