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Chadwick issued 5m 5% convertible debentures at par on 1 January 2015. The debentures can either be converted into ordinary shares, or redeemed at...

Chadwick issued £5m 5% convertible debentures at par on 1 January 2015. The debentures can either be converted into ordinary shares, or redeemed at par at any date from 31 December 2018. Interest is paid annually in arrears on 31 December and interest rate on similar debentures without the conversion option is 8%.


Explain how this item should be accounted for under IAS 32 at inception, and subsequently during the year ended 31st December 2015. Include brief extracts from the SOFP as at 31st December 2015, and Income statement for the year then ended.

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The convertible debentures are recognized as a hybrid instrument and as per IAS 32 equity component and liability component... View the full answer

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