On 1 April 2019 White Bhd issued 1 million 5% convertible loan stock at RM1 million. The loan stock is redeemable at RM1 million for cash on 31 March 2023, or are convertible into 1 million new ordinary shares at that date. The interest is paid on 31 March each year. An interest rate on similar loan stock without the conversion option is 7% pa. The expectation is that loan holders will choose the conversion option rather than redeeming the loan stock.
On 1 April 2019 White Bhd issued 1 million 5% convertible loan stock at RM1 million. The loan stock is redeemable at RM1 million for cash on 31 March 2023, or are convertible into 1 million new ordinary shares at that date. The interest is paid on 31 March each year. An interest rate on similar loan stock without the conversion option is 7% pa. The expectation is that loan holders will choose the conversion option rather than redeeming the loan stock.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Answer only last subpart
D
Transcribed Image Text:QUESTION 3
PART A
On 1 April 2019 White Bhd issued 1 million 5% convertible loan stock at RM1 million.
The loan stock is redeemable at RM1 million for cash on 31 March 2023, or are convertible
into 1 million new ordinary shares at that date. The interest is paid on 31 March each year.
An interest rate on similar loan stock without the conversion option is 7% pa. The
expectation is that loan holders will choose the conversion option rather than redeeming
the loan stock.
Required:
a) Calculate the equity and liability components of the 5% convertible loan stock on
1 April 2019.
b) Prepare the journal entries to record the transaction on 1 April 2019.
c) Show the extracts from the statements of financial performance and the statements
of financial position for the year 31 March 2020.
d) Assuming that all the loan stock holders choose to convert all their interests into
ordinary shares on maturity, show the journal entries to record the transaction.
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