Young company issued 5,000 convertible bonds at the beginning of the current year. The bonds have a four year term with a stated rate of interest of 6% and are issued at face amount of 1,000 per bond. Interest is payable annually on December 31. Each bond is convertible into 50 ordinary shares with a par value of 10. The market rate of interest on similar nonconvertible bond is 9%. At the issuance date, the amount of 485,000 was credited to share premium from conversion privilege. The bonds were not converted and instead, the entity paid off the convertible bondholders at maturity. What amount should be recorded as gain or loss on the full payment of the convertible bonds at maturity?
17. Young company issued 5,000 convertible bonds at the beginning of the current year. The bonds have a four year term with a stated rate of interest of 6% and are issued at face amount of 1,000 per bond.
Interest is payable annually on December 31. Each bond is convertible into 50 ordinary shares with a par value of 10.
The market rate of interest on similar nonconvertible bond is 9%. At the issuance date, the amount of 485,000 was credited to share premium from conversion privilege.
The bonds were not converted and instead, the entity paid off the convertible bondholders at maturity.
What amount should be recorded as gain or loss on the full payment of the convertible bonds at maturity?
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