AuthorTopic: Convertible & debt with warrants query
@2015-03-01 10:09:21
Hey guys, need your assistance on this 1. I donít know if I even need to clear this up for the exam but just in case.

Ok, under IFRS convertible bonds:

The fair value of the bond is recorded as a liability
The difference between the issue proceeds and the fair value of the liability is sent to equity.

But what really is the difference between the fair value and the issue proceeds, literally? Iím assuming that the above values are all calculated at issue, so the issue proceeds would be calculated at market interest rates at issuance and the fair value would be the same value (since it uses current market rates). Am I wrong? Please help me. Same problem for debts with warrants, this time under both GAAP & IFRS.

CFA Discussion Topic: Convertible & debt with warrants query

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Craig Baugh