n January 1, 2022, Cai Ltd. issued a 10% convertible bond at par, with a face value of ¥100,000, maturing on January 1, 2032 (amounts in thousands). The bond is convertible into ordinary shares of Cai at a conversion price of ¥2,500 per share. Interest is payable annually. At date of issue, Cai could have issued at par non-convertible debt with a 10-year term bearing an interest rate of 11% instruction a) Prepare the journal entry to record the issuance of the convertible debt on January 1, 2022. b) On January 1, 2025, Cai makes a tender offer to the holder of the convertible debt to repurchase the bond for ¥112,000, which the holder accepts. At the date of repurchase, Cai could have issued non-convertible debt with a 7-year term at an effective-interest rate of 8%. Prepare the journal entry to record this repurchase on January 1, 2025.
n January 1, 2022, Cai Ltd. issued a 10% convertible bond at par, with a face value of ¥100,000, maturing on January 1, 2032 (amounts in thousands). The bond is convertible into ordinary shares of Cai at a conversion price of ¥2,500 per share. Interest is payable annually. At date of issue, Cai could have issued at par non-convertible debt with a 10-year term bearing an interest rate of 11% instruction a) Prepare the journal entry to record the issuance of the convertible debt on January 1, 2022. b) On January 1, 2025, Cai makes a tender offer to the holder of the convertible debt to repurchase the bond for ¥112,000, which the holder accepts. At the date of repurchase, Cai could have issued non-convertible debt with a 7-year term at an effective-interest rate of 8%. Prepare the journal entry to record this repurchase on January 1, 2025.
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter7: Financial Activities
Section: Chapter Questions
Problem 10QE
Related questions
Question
On January 1, 2022, Cai Ltd. issued a 10% convertible bond at par, with a face value of ¥100,000, maturing on January 1, 2032 (amounts in thousands). The bond is convertible into ordinary shares of Cai at a conversion price of ¥2,500 per share. Interest is payable annually. At date of issue, Cai could have issued at par non-convertible debt with a 10-year term bearing an interest rate of 11%
instruction
a) Prepare the journal entry to record the issuance of the convertible debt on January 1, 2022.
b) On January 1, 2025, Cai makes a tender offer to the holder of the convertible debt to repurchase the bond for ¥112,000, which the holder accepts. At the date of repurchase, Cai could have issued non-convertible debt with a 7-year term at an effective-interest rate of 8%. Prepare the journal entry to record this repurchase on January 1, 2025.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Recommended textbooks for you
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College