Determine the extent to which Person C deduct each of these payments.

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Chapter 17, Problem 15AP

To determine

Determine the extent to which Person C deduct each of these payments.

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On January 1, 2024, Sunfish Co. issued a $22 million, 8%, 6-year convertible bond with annual coupon payments. Each $1,000 bond was convertible into 35 shares of Sunfish's common shares. Shark Investments purchased the entire bond issue for $22.7 million on January 1, 2024. Shark estimated that without the conversion feature, the bonds would have sold for $21,013,098 (to yield 9%). On January 1, 2025, Shark converted bonds with a par value of $8.8 million. At the time of conversion, the shares were selling at $30 each. Required Prepare the journal entry to record the issuance of convertible bonds. Prepare the journal entry to record the conversion according to IFRS (book value method). Prepare the journal entry to record the conversion according ASPE (market value method).

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