On the 1st of may 2023 the Blue Company issued and sold convertible bonds. The bonds have a term of 8 years and their final maturity date is 1st of may 2031. Interest is paid annually on the 1st of may each year, and the first interest payment will be 1st of may 2024. The nominal value of the bonds is 750,000,000. The nominal interest rate of the bonds is 5.5% and they were sold based ona 7.5% yield. The bonds can be converted into shares in the company at a rate of 4. Share price in the Blue Company when the bonds were sold were 3.5. No bonds were converted into equity in 2023. If the bonds were not convertible they would have been sold at a yield of 10.5%. The income tax rate is 21% What entries must be made in the Blue Company books in 2023 because of the bonds?

On the 1st of may 2023 the Blue Company issued and sold convertible bonds. The bonds have a term of 8 years and their final maturity date is 1st of may 2031. Interest is paid annually on the 1st of may each year, and the first interest payment will be 1st of may 2024. The nominal value of the bonds is 750,000,000. The nominal interest rate of the bonds is 5.5% and they were sold based ona 7.5% yield. The bonds can be converted into shares in the company at a rate of 4. Share price in the Blue Company when the bonds were sold were 3.5. No bonds were converted into equity in 2023. If the bonds were not convertible they would have been sold at a yield of 10.5%. The income tax rate is 21% What entries must be made in the Blue Company books in 2023 because of the bonds?

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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