On January 1, 2019, Wayward Co. issued a $22 million, 8%, 6-year convertible bond with annual coupon payments. Each $1,000 bond was convertible into 35 shares of Wayward's common shares. Moonbeam Investments purchased the entire bond issue for $22.7 million on January 1, 2019. Moonbeam estimated that without the conversion feature, the bonds would have sold for $21,013,098 (to yield 9%).
On January 1, 2020, Moonbeam converted bonds with a par value of $8.8 million. At the time of conversion, the shares were selling at $30 each.
Required:
a. Prepare the journal entry to record the issuance of convertible bonds.
b. Prepare the journal entry to record the conversion according to IFRS (book value method).
c. Prepare the journal entry to record the conversion according ASPE (market value method).

Question

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The Answer of On January 1, 2019, Wayward Co. issued a $22 million, 8%, 6-year convertible bond with annual coupon payments. Each $1,000 bond was convertible into 35 shares of Wayward's common shares. Moonbeam Investments purchased the entire bond issue for $22.7 million on January 1, 2019. Moonbeam estimated that without the conversion feature, the bonds would have sold for $21,013,098 (to yield 9%).
On January 1, 2020, Moonbeam converted bonds with a par value of $8.8 million. At the time of conversion, the shares were selling at $30 each.
Required:
a. Prepare the journal entry to record the issuance of convertible bonds.
b. Prepare the journal entry to record the conversion according to IFRS (book value method).
c. Prepare the journal entry to record the conversion according ASPE (market value method).