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A531-5UFS - Requirement(a Since the company is following...

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Requirement (a) Since the company is following IFRS, the amount that should have been reported in the equity Name: Umme Fatema Siddique Cash Proceeds ($1,000,000 x 108%) $1,080,000 Student Number: 805 936 291 Less: Bonds Payable ($1,000,000 x 98%) $(980,000) Course Code/Number: ACCT 531 Convertion Right Amount $100,000 Assignment Number: 5 The Journal Entry that should have been recorded on Jan 1 ,2011 is: Cash $1,080,000 Bonds Payable $980,000 Contributed Surplus-Convertion Rights $100,000 Requirement (b) Under the ASPE standard, we have an option to measure the equity component at $0 value. Or alternatively, we can measure the component that is most easily measurable and apply the residual to the other (debt) component. The previous bookeeper would be corrent if this option had exist. But in IFRS, we always measure the debt component at first (generally the PV of Cash Flow), and then the rest of it is allocated to equity. But in this case for Lacroix Inc., the debt-to asset ratio is of great concern for the company. So we have to follow the IFRS rule here anyways.
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