6.Quiz6Sol - Part 1: Provide the journal entry On 1 January...

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ADM3340A Fall 2008 Quiz #6 1/2 ADM3340A Fall 2008 Quiz #6 Suggested Solution Question 1 On 1 January 2008 BondLabrador Limited, a Canadian publically listed entity, issued a 10-year, $1,000,000 convertible bond with a nominal interest rate of 8.00%; cash interest is paid annually. The conversion feature enables BondLabrador to require the bond holders to convert each $1,000 face value bond into 100 common shares at any time before the bond maturity date. The market rate of interest for debt of similar size, risk, and term is 6.00%. BondLabrador uses the effective interest rate method when accounting for these bonds.
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Unformatted text preview: Part 1: Provide the journal entry On 1 January 2008 to record the issuance of the bond. Note: students were not required to provide the above U.S. GAAP journal entries. Part 2: Provide the journal entry required at 31 December 2008. Part 3: Assume the bonds are converted by BondLabrador on 1 January 2009. Provide the journal entry to record the conversion. Note: students were not required to provide the above U.S. GAAP journal entries. Students: see www.bondlabrador.com ADM3340A Fall 2008 Quiz #6 2/2 Note: students were not required to provide the above amortization tables....
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6.Quiz6Sol - Part 1: Provide the journal entry On 1 January...

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