What is the value of equity to be recognised in YZ’s statement of financial position as at 31 December 20X5?

CORRECT TEXT

YZ issued $100,000 6% convertible bonds at par on 1 January 20X5. The bondholders have the option to convert into equity shares in 3 years’ time or redeem at par for cash on the same date.

Interest is paid annually in arrears and bonds issued by similar entities without conversion rights pay interest at 8%.

What is the value of equity to be recognised in YZ’s statement of financial position as at 31 December 20X5?

Give your answer to the nearest whole $.

$?

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Answer: 5138