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On January $1,2023,$ when the fair value of its common shares was $$78$ per share, Ivanhoe Corp issued $$11$ million of $9\%$ convertible debentures due in $20$ years. The conversion option allowed the holder of each $$1,000$ bond to convert the bond into $6$ common shares. The debentures were issued for $$11\mathrm{.}6$ million. The bond payment's present value at the time of issuance was $$9\mathrm{.}2$ million and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January $1,2024,$ the corporation's common shares were split $3$ for $1,$ and the conversion rate for the bonds was adjusted accordingly. On January $1,2025,$ when the fair value of the corporation's common shares was $$149$ per share, holders of $28\%$ of the convertible debentures exercised their conversion option. Ivanhoe applies ASPE and uses the straight$-$line method for amortizing any bond discounts or premiums.

$($a$)$

Your answer is correct.

Prepare the entry to record the original issuance of the convertible debentures. $($Credit account titles are automatically indented when the amount is entered. Do not indent manually. I$|$

E

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required, select $"$No Entry" for the account titles and enter $0$ for the amounts. List all debi cranes before credit entries.$)$

B$.$ Using the book value method, prepare the entry to record the exercise of the conversion option. $($Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts.

List all debit entries before credit entries.$)$

Account Titles and Explanation

Bonds Payable$=?$

Contributed Surplus $-$ Conversion Rights$=?$

Common Shares$=?$

C$.$ How many shares were issued as a result of the conversion?

Number of shares$$issued

shares

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