In year 2017, KSM Berhad issues 1,000 convertible bonds with five-year term. The face value of the bond is RM1,200 per bond. Each bond is convertible at any time up to maturity into 500 ordinary shares. Interest is payable annually in arrears at a nominal interest rate of 2%. The prevailing market interest rate for similar debt without conversion option is 5% Required: (i) Discuss the types of Investments. (ii) Determine both the value of equity and liability components of the bond. (ii) Show relevant journal entries

In year 2017, KSM Berhad issues 1,000 convertible bonds with five-year term. The face value of the bond is RM1,200 per bond. Each bond is convertible at any time up to maturity into 500 ordinary shares. Interest is payable annually in arrears at a nominal interest rate of 2%. The prevailing market interest rate for similar debt without conversion option is 5% Required: (i) Discuss the types of Investments. (ii) Determine both the value of equity and liability components of the bond. (ii) Show relevant journal entries

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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