E16.2 (LO 1) (Issuance and Repurchase of Convertible Bonds) Assume the same information in E16.1, except that Angela AG converts its convertible bonds on January 1, 2023. Instructions a. Compute the carrying value of the bond payable on January 1, 2023. b. Prepare the journal entry to record the conversion on January 1, 2023. c. Assume that the bonds were repurchased on January 1, 2023, for €1,940,000 cash instead of being converted. The net present value of the liability component of the convertible bonds on January 1, 2023, is €1,900,000. Prepare the journal entry to record the repurchase on January 1, 2023.

E16.2 (LO 1) (Issuance and Repurchase of Convertible Bonds) Assume the same information in E16.1, except that Angela AG converts its convertible bonds on January 1, 2023. Instructions a. Compute the carrying value of the bond payable on January 1, 2023. b. Prepare the journal entry to record the conversion on January 1, 2023. c. Assume that the bonds were repurchased on January 1, 2023, for €1,940,000 cash instead of being converted. The net present value of the liability component of the convertible bonds on January 1, 2023, is €1,900,000. Prepare the journal entry to record the repurchase on January 1, 2023.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 5P

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